Investors may have added $1.69 billion to hedge funds in February but face a rough road in 2019 with net inflows still in the negative YTD for 2019, according to the just-released eVestment 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 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% and all but one product being positive in 2018.
Some other interesting findings from the new report include:
- 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.