Key Takeaways
- • Hedge funds recorded net investment outflows of $11.66 billion in August 2022, according to Nasdaq's eVestment, marking the third consecutive month of negative net flows.
- • Year-to-date redemptions total $44.93 billion, placing 2022 on pace with 2016, 2018, 2019 and 2020, when average annual outflows were $77 billion.
- • Long/short equity funds have lost $25.06 billion to redemptions this year, with over 60% of funds in the strategy seeing asset declines.
- • Macro strategies posted the largest August outflows at $3.68 billion, followed by long/short equity at $3.03 billion.
- • Multistrategy funds were the only category to attract net inflows in August, suggesting investors favor diversified single allocations over concentrated strategy bets.
Summary
Net investment flow into hedge funds was negative $11.66 billion in August, according to a recent report from Nasdaq's eVestment. It was the third consecutive month of negative net flows for the industry. Year to date, $44.93 billion has been redeemed from hedge funds, a pattern that mirrors prior years. Between 2016, 2018, 2019 and 2020, average annual outflows reached $77 billion, and the report notes that 2022 is tracking in line with those years. Historically, the second half of the year has tended to be negative for hedge fund flows, with December typically recording the largest number of redemptions.
Long/short equity, credit and macro-based strategies have continued to face redemption pressure through 2022, and that persisted in August. Macro strategies recorded the largest monthly outflows at $3.68 billion, followed by long/short equity funds at $3.03 billion. Long/short equity has seen the heaviest redemptions over the year, with $25.06 billion withdrawn so far. More than 60% of funds in that segment have lost assets in 2022, per eVestment. Directional credit funds ranked second in year-to-date redemptions at $21.23 billion.
Managed futures funds, the best-performing hedge fund strategy with a 9.97% return year to date, also experienced negative flows in August as performance cooled in recent months. Multistrategy funds were the only category to record net inflows during the month. According to the data, investors this year have shown limited conviction toward any single strategy and have preferred to access a diversified set of strategies through one allocation.
Despite the outflows, the hedge fund sector still manages $3.49 trillion in assets, supported by strong performance with average annual returns of 9.29% in 2019, 2020 and 2021.
Long/short equity, credit and macro-based strategies have continued to face redemption pressure through 2022, and that persisted in August. Macro strategies recorded the largest monthly outflows at $3.68 billion, followed by long/short equity funds at $3.03 billion. Long/short equity has seen the heaviest redemptions over the year, with $25.06 billion withdrawn so far. More than 60% of funds in that segment have lost assets in 2022, per eVestment. Directional credit funds ranked second in year-to-date redemptions at $21.23 billion.
Managed futures funds, the best-performing hedge fund strategy with a 9.97% return year to date, also experienced negative flows in August as performance cooled in recent months. Multistrategy funds were the only category to record net inflows during the month. According to the data, investors this year have shown limited conviction toward any single strategy and have preferred to access a diversified set of strategies through one allocation.
Despite the outflows, the hedge fund sector still manages $3.49 trillion in assets, supported by strong performance with average annual returns of 9.29% in 2019, 2020 and 2021.
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