Investors Have Pulled $63 Billion From Hedge Funds This Year — But These Strategies Are Raking in Cash

The first two-thirds of 2019 have been rough for the hedge fund industry.

In the eight months through the end of August, investors redeemed $63.61 billion from hedge funds on a net basis, according to data from eVestment. The outflows are a continuation of the wave of redemptions that started back up in 2018, when investors pulled $37.18 billion out of the industry.

“The negative commentary around the current state of flows has become monotonous,” eVestment said in its August hedge fund flows report. “While there were some highlights… on the surface August was another in a string of difficult months for the industry.”

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According to the report, all but three of the main strategies tracked by eVestment have recorded net outflows in 2019, with long-short equity hedge funds and macro strategies being hit the hardest.

So far this year, only 30 percent of the long-short equity funds in eVestment’s manager universe have experienced net inflows, the data firm said. These hedge funds, which make up roughly $759.71 billion of total industry assets, suffered $31.14 billion in net redemptions during the first eight months of 2019. This includes $5.33 billion redeemed in the month of August, when flows were positive for most other strategies. 

The least popular strategy in August was macro, with macro funds hit by $6.18 billion in net outflows. According to eVestment, this spike in outflows represented the worst month for macro strategies since the end of 2013. Investors have redeemed $18.61 billion from macro hedge funds in all of 2019.

The only strategies which have not suffered net outflows so far this year, according to eVestment, are event-driven hedge funds, hedge funds trading mortgage-backed securities, and convertible arbitrage funds. Event-driven managers, in fact, have attracted $13.28 billion in net inflows this year, including $2.59 billion in the month of August. This is a reversal from 2018, when the strategy recorded $3.53 billion in outflows.

Meanwhile, managers dealing in mortgage-backed securities have attracted $6.17 billion in net inflows so far this year, continuing positive flows seen in 2018. Convertible arbitrage hedge funds, which had more-or-less neutral flows last year, have attracted $1.62 billion in net new investments this year through August.