Investors may have added USD1.69 billion to hedge funds in February but they face a rough road in 2019 with net inflows still in the negative YTD, according to eVestment’s February 2019 Hedge Fund Asset Flows Report.
February is traditionally a bellwether month for hedge fund industry performance for the rest of the year, and February 2019 was the worst February for net flows in a decade.
However, while flows have generally been disappointing, individual products have performed quite well, with multi-strategy funds emerging as a preference for investors in 2019, with continued strong performance from January. eVestment has also seen a clear preference for large managers in the space, with the top ten largest inflows seeing average returns of over 3 per cent and all but one product being positive in 2018.
Following low performance in 2018, investors are fleeing from macro and managed futures strategies, with two thirds of reporting managers seeing redemptions pressures in 2019.
Long/short equity continues to see redemptions in 2019, although to a lesser degree than in January. However, fewer than half of reporting managers experienced outflows in February, showing demand is still there.
Emerging markets saw a second month of inflows in 2019, although a large concentration of inflows was in fixed income/credit opportunities. Overall, the capital raising environment for EM funds remains difficult.