Stockholm (HedgeNordic) – Investors poured $7.4 billion into hedge funds during the month of August, continuing the industry’s asset recovery journey following four consecutive months outflows from March through June. Investors added an additional $9 billion to the hedge fund industry in July, according to eVestment.
Despite enjoying two consecutive months of net inflows, year-to-date asset flows are still well into negative territory after the hedge fund industry registered strong outflows in the first half of 2020. On a year-to-date basis, the industry recorded $37.6 billion in net redemptions through the end of August. According to eVestment’s latest hedge fund asset flows report, the hedge fund industry has $3.197 trillion under management.
According to eVestment, the volume of inflows in August was light but well disbursed, as most funds tracked by eVestment enjoyed asset inflows during the month. “August was generally a broadly positive month for the hedge fund industry, though there were pockets of large redemptions clouding the picture,” says Peter Laurelli (pictured), eVestment’s Global Head of Research. “The proportion of funds with inflows was nearly 60%, which would make August 2020 the second most broadly positive month for hedge fund asset flows in the past five years.”
Macro hedge funds enjoyed the highest volume of asset inflows in August, marking the second consecutive month of net inflows for the group. Despite receiving $2.8 billion in net inflows last month, year-to-date net redemptions from macro funds are still significant at $13.3 billion due to outflows during the February-to-April period. “The largest redemptions came from funds which have mostly underperformed, with the five largest outflows being from funds which have each underperformed the average of their peers in 2020,” writes eVestment.
Net capital flows for managed futures vehicles were positive for a third consecutive month, with the group amassing a net $1.8 billion in August. According to eVestment, about 60 percent of the universe received net inflows last month. On the other hand, long/short equity funds continued their long-running losing streak in terms of asset outflows. Investors pulled $1.9 billion from long/short equity funds in August, taking the year-to-date net outflow figure to $12.4 billion. Investors redeemed an additional $44.5 billion from these funds in 2019.
According to eVestment, “there are few concentrated redemptions within long/short equity heavily influencing the group’s overall flow picture.” Underwhelming performance on the part of some long/short equity players is mainly driving the redemption wave. “Just looking at August, the primary drivers of redemptions have returned an average of -16.5% in 2020, while the primary drivers of inflows have returned +14.7% through August,” writes eVestment.