In its monthly hedge fund flows report for July, published on August 24, the data provider eVestment said investors pulled a net $ 25.2 billion from hedge funds globally.
This equated to the roughest month for hedge funds since February 2009, according to eVestment’s global head of research Peter Laurelli, when $ 28.2 billion was pulled as markets recoiled from the collapse of Lehman Brothers.
July’s outflows brought the total net amount withdrawn in 2016 to $ 55.9 billion and kept assets under management in the global hedge fund industry hovering around the $ 3 trillion mark.
eVestment found that in July fixed-income and multi-asset funds suffered the most severe withdrawals, both at more than $ 10 billion, while equities saw $ 7.7 billion pulled. The exception being commodities hedge funds, which took in $ 2.6 billion.
Across strategies, meanwhile, only managed futures funds enjoyed inflows in the month.
If things continue for the remainder of the year – a period in which markets will continue to face uncertainties around the UK’s exit from the EU and the US presidential election – then 2016 could end up being only the third year on record, after 2008 and 2009, of net outflows from hedge funds.
In 2015, the industry attracted $ 44.1 billion of new money but ended the year down slightly in performance terms, according to eVestment’s Hedge Fund Aggregate index.
eVestment wrote in its report: “Investor redemptions from the industry continue to be driven by mediocre performance.”
The 10 hedge funds that suffered the largest outflows in July, which were not named, had lost on average 4.1% in the year. The 10 hedge funds that received the largest allocations had returned nearly 7%.
On August 20, Barron’s – part of the Dow Jones Group that owns FN – reported that institutional investors and wealthy individuals were reluctant to invest more with hedge funds until performance improved.