Investors withdrew an estimated $7.88 billion from global hedge funds in June 2018, bringing overall Q2 2018 net flows for the industry to -$5.43 billion, according to the just-released eVestment June and Q2 2018 Hedge Fund Asset Flows Report.
Industry assets under management (AUM) stood at $3.308 trillion at the end of the quarter and signs of industry consolidation continue to present themselves. Among investors, the new report shows a strong demand for funds that have performed well, with a preference for size, and clearly investors are willing to remove assets from those funds not meeting expectations.
Some interesting points from the new report include:
- Among primary strategies, Macro funds are among the big winners this year, with AUM up +$2.89 billion in June, up +$6.24 billion for the second quarter and up +$14.82 billion so far this year. However, looking more closely shows that over 60% of reporting Macro funds faced net redemptions in June and products with net inflows were dominated by a small handful of funds.
- Fixed-income-focused Emerging Markets products were the primary cause of top-line redemption figures from Emerging Markets funds in June, with AUM falling -$1.49 billion in June. This follows across the board performance problems in Emerging Markets funds this year, as noted in eVestment’s June/Q2 2018 Hedge Fund Performance Report. Funds focused on countries like China, India and Russia are deep in the red this year, following exceptional performance in 2017.
- There has been no prolonged evidence of interest in MBS-focused products since 2014, until now. June was the fifth consecutive month of net inflows (+$1.27 billion in June), the longest streak of positive sentiment since 2010. This year, MBS-focused products have brought in an additional $4.53 billion, bringing overall AUM in the segment to $91.1 billion.
- Among primary hedge fund strategies, Multi-Strategy funds were the biggest losers for June and YTD. Investors pulled $4 billion from these funds last month and have pulled a total of $8.26 billion this year. Multi-Strategy funds remain one of the largest primary segments, however, with AUM standing at $528.29 billion.
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