Investors Add $6.3B to Hedge Funds in August; Total Industry AUM $3.02T

Sep 22 2016 | 10:08pm ET

Hedge fund investors allocated $6.3 billion in new assets to the industry during August, bringing overall industry assets back over the $3 trillion mark, according to new research from eVestment.

The company’s Hedge Asset Flows Report for August reveals overall year-to-date flows stand at -$51.8 billion, and new money isn’t pouring into the industry or any specific segment, but the August numbers are good, if muted, news for many hedge fund managers. The positive flow during August pushed total industry assets to $3.021 trillion, eVestment said. 

Other key points from eVestment’s August report:

  • Despite two consecutive months, and three in the last four, of aggregate performance declines, commodity funds continued to be favored by investors, receiving their largest monthly inflow, $2.73 billion, since August 2009.
  • Managed futures funds continue to be another aggregate bright spot for flows in 2016, at $4.17 billion in August and $20.31 billion YTD, however we continue to see dislocation from positive sentiment within the large, archetypal managed futures fund segment.
  • Macro strategies continued to feel the weight of redemptions for a third consecutive month, with -$3.42 billion in August, and for the ninth month in the last year. While dissatisfaction with prior year returns has been a factor, we have begun to see elevated redemptions from products which performed reasonably well in 2015, but have underperformed in 2016.
  • Multi-strategy hedge funds faced very elevated redemption pressures in June and July, however many of the largest multi-strategy funds appear to have had inflows in August, despite aggregate net outflows.
  • Several sources of large redemptions in 2016 through July saw reversals of fortune in August, including event driven and credit funds. Inflows were light, but a welcome reprieve from what has been a very difficult 2016.
  • After very elevated redemptions in July, flows were near flat for emerging market strategies in August, though regional/country specific differences were evident. EM fund flows have now been negative for four of the last five months and investors have removed an estimated $2.6 billion from the universe this year.
  • China-focused funds experienced another month of net redemptions in August, however reported data estimating outflows of $33.1 million from the universe is the lightest level of redemptions this year.
  • Brazil has been a primary source of outsized performance in 2016, but investors have generally reacted indifferently, in aggregate, to products focused on opportunities within the country this year. August flows indicate investors have actually decided to reduce exposure.

After outflows in June and July nearly reminiscent of the tailend of the global financial crisis, investors’ dissatisfaction with 2015 performance may be exhausted,” said eVestment head of research Peter Laurelli. “While this is positive for sectors able to perform well this year, including event driven and certain credit strategies, the picture is not universally bright - commodity strategies have seen performance dips in recent months, and there is evidence of dissatisfaction with near-term performance from investors in both macro and managed futures universes. 

“Despite these pockets of negativity, the appearance of large multi-strategy fund returns among industry leaders may be another signal the allocation preferences seen in 2014 and 2015 could return,” he added. 

Atlanta-based eVestment was founded in 2000 by Jim Minnick, Matt Crisp and Heath Wilson. The company boasts one of the most comprehensive global databases of traditional and alternative strategies and provides institutional investment data intelligence and analytic solutions to clients worldwide.

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