Despite a strong start to the year, which saw Q1 2019 average hedge fund performance hit +5.34%, investors continued to pull money from the business, redeeming an estimated $13.69 billion from the industry in March, according to the March 2019 eVestment Hedge Fund Asset Flows Report.
Q1 2019 marked the fourth consecutive quarter of net outflows from the industry, but Q1’s strong performance more than offset investor redemptions, leaving overall hedge fund industry assets under management (AUM) at $3.258 trillion. Large Macro, Long/Short Equity and Managed Futures funds, which underperformed in 2018, were responsible for most redemptions in March.
Other interesting trends highlighted in the new report include:
- Directional Credit funds continued an asset-gaining winning streak from 2018, pulling in +$1.26 billion in new assets in March for a total of +$2.20 billion in new assets in Q1 2019. Last year these funds were also new-asset gainers, pulling in +$4.20 billion.
- Event Driven, Market Neutral Equity and Convertible Arbitrage funds (although just barely on the last one) were in the green in March as well.
- Emerging Markets funds had a strong March and Q1 in asset flows, pulling in +$2.15 billion for the month and +$4.49 billion for the quarter. The bulk of those new assets went to China-focused funds.
- Hedge funds focused on investments in the Americas and Asia performed strongly in March, adding +$1.39 billion and +$1.77 billion respectively last month. On the other hand, funds focused on investments in Europe saw redemptions of -$1.59 billion and funds focused globally saw -$15.25 billion pulled by investors in March.