Hedge Funds Suffer Worst Outflows since Financial Crisis

Jon Blogosphere, Economy, Market Commentary

2016 may see second-highest redemptions in history!
The toxic mix of crummy performance and high fees are having some impact. And it’s big money: The hedge fund industry has over $3 trillion under management. And some of this money is getting antsy.
In July, hedge funds experienced net outflows of an estimated $25.2 billion, the largest monthly net redemption since February 2009 ($28.2 billion), according to an eVestment report cited by Bloomberg. In June, hedge funds got hit with net outflows of $23.5 billion. In March, redemptions had hit $7 billion, and in January $20 billion. With some inflows in the remaining three months, total outflows for 2016 so far amount to $55.9 billion.
‘Unless these pressures recede, 2016 will be the third year on record with net annual outflows,’ according to eVestment’s report. The other two years were 2008 and 2009.
During the first seven month, when the S&P 500 rose 7.6%, hedge funds industry-wide had gains of only 1.2%, according to Bloomberg. The 10 funds with the largest redemptions lost on average 4.1%.

This post was published at Wolf Street by Wolf Richter ‘ August 25, 2016.