Hedge funds close Q1 with +USD17.68bn in flows, total AUM at USD3.417tn

While investors pulled USD9.36 billion from the global hedge fund sector in March, quarterly flows remained positive, at +USD17.68 billion, according to the just-released March 2021 eVestment Hedge Fund Asset Flows Report. 

Hedge funds’ strong performance so far this year, which has sparked renewed interest in the business among some investors, also added to overall assets under management (AUM), increasing total hedge fund business AUM to USD3.417 trillion at the end of Q1.
“The theme of broadly distributed inflows we’ve seen in previous months this year slowed in March, with the overall proportion of funds with inflows in March at 47 per cent,” says eVestment Global Head of Research Peter Laurelli. “Unfortunately, several funds, some with long and impressive track records, are seeing redemption repercussions from underperformance in 2020, hurting the overall picture of their segments and the hedge fund business.”
Macro hedge funds were big asset losers among primary strategies eVestment tracks in March, with investors pulling USD4.34 billion from these funds last month. Inflows to these funds in January and February were erased for the quarter, with Q1 2021 flows now standing at -USD180 million. And following the inflows in January and February, Macro fund managers can’t be happy to see the trend turn and must be eager to avoid the huge outflows these funds experienced in 2020 (-USD14.10 billion) and in 2019 (-USD20.60 billion).
Long/Short Equity funds were also big asset losers in March among primary strategies, with investors pulling -USD3.42 billion from these funds, bringing Q1 flows to -USD5.34 billion. However, according to Laurelli, a large part of these funds’ net outlfows are highly concentrated within a couple of firms. With those redemptions removed, Long/Short Equity funds would be seeing net inflows in 2021.
On the plus side, net flows to Multi Strategy funds in March were positive at +USD2.27 billion, representing the sixth month in the last seven that these funds had inflows. Q1 2021 flows stand at +USD12.09 billion, which is likely a welcome change for Multi Strategy fund managers who saw investors pull USD2.37 billion from these funds in 2020 and USD18.31 billion in 2019.
The majority of primary strategies eVestment tracks are still positive for new investor money for the first quarter, but some just barely, as investor redemptions take a toll on what had looked to be a more positive story through February.