A steady rally in stocks and elevated bond yields are pressuring global hedge funds to boost returns as they fight to staunch investor outflows, according to a report by Reuters that quotes industry insiders.
The report noted that investors have pulled about a net $75 billion from hedge funds so far in 2023 and allocations to the $3.4 trillion industry have slowed, data from Nasdaq eVestment showed. The outflows come on the heels of some $112 billion that left hedge funds last year
Hedge funds in 2023 averaged a 5.7% return this year through November, according to hedge fund research firm PivotalPath. Strategies focused on equities and credit were the best performers, while macro and managed futures lagged.
By contrast, the S&P 500 is up about 24% this year, as of Dec. 20. Hedge funds are also competing with returns from bond markets, which have perked up thanks to a late-year rally: Bloomberg’s U.S. Aggregate Bond Index has risen 4.88% for the same period, the report added.
