Hedge fund assets fell $18.8 billion in May, despite a net inflow of $9.5 billion from investors.
Industry assets fell to $2.53 trillion in May, according to data from eVestment|HFN, thanks to performance losses of $28.3 billion.
The net inflows in May came after two consecutive months of net outflows and mean that, year to date, investors have poured a net $35.0 billion into hedge funds. Performance gains have contributed an additional $37.6 billion and as a result, hedge fund assets under management are up $72.6 billion YTD, or 2.95%.
eVestment|HFN said reporting hedge funds posted an asset-weighted loss of 1.11% in May, compared to an equal-weighted decline of 1.54%, implying large funds had more success negotiating a difficult month. Large funds (those with AUM over $1 billion) lost 1.44% on average in May, while mid-size funds ($250,000 to $1 billion) lost 2.29% and small funds (under $250,000) lost 1.58%.
In actuality, the majority of reporting funds experienced outflows in May, but this was mostly due to redemptions from smaller funds—65% of all funds with assets over $1 billion had net inflows as did 53% of all mid-sized funds.
The data provider says investors continued to favor credit and macro funds over equity strategies in May, resulting in net inflows of $9.5 billion into credit funds and $2.7 billion into macro funds. Equity strategies had net inflows of $1.9 billion.
Commodity and managed futures funds experienced net outflows of $820 million and $1.5 billion, respectively, in May.
Emerging markets assets continued to fall—net outflows in May were $1.1 billion—and eVestment|HFN said the “current slide of investor assets from EM funds is unlike any we have seen since tracking fund flows back to 2003 and is only eclipsed in magnitude (but not duration) by redemptions during 2008 and 2009.”
Investors responded to ongoing turmoil in Europe by redeeming about $9.3 billion from funds located in Europe and $9.1 billion from funds investing primarily in Europe.