Eurekahedge: YTD Level of Hedge Fund Redemptions Steepest Since 2009

Oct 19 2016 | 9:40pm ET

Redemption pressure continued unabated in September even as hedge funds booked their seventh straight month in the green, according to Eurekahedge’s October 2016 report.

As of September 2016, hedge funds have recorded their fifth month of investor redemptions, pushing net investor allocations into the red for the year at $8.7 billion of outflows so far this year. It’s the steepest reading for year-to-date redemptions since 2009. 

However, the pressure has not been evenly distributed across all sectors of the hedge fund industry, Eurekahedge’s research reveals. CTA/managed futures and multi-strategy hedge funds, for instance, have seen stronger subscriptions.

Key highlights of the October report:

  • The asset base for the $1.49 trillion North American hedge fund industry has grown by $13.1 billion so far this year, most of which coming from performance gains ($18.5 billion year-to-date), while redemptions of $5.5 billion were recorded over the same period.
  • The $207.5 billion event-driven hedge fund space has seen $14 billion of investor redemptions roll in over the past nine months, the strategy’s steepest YTD outflows on record and up from $1.5 billion in outflows over the same period last year. 
  • The $254.6 billion CTA/managed futures hedge fund industry, on the other hand, has seen its asset base grow by $17.1 billion over the past nine months, with the strategy recording its highest level of year-to-date investor inflows at $11 billion.
  • The European hedge fund industry has seen its asset base contract by $5.5 billion year-to-date, as investors have redeemed $17.1 billion from the $529.6 billion sector over the past five consecutive months. 
  • Despite the redemptions, hedge fund performance remained buoyant in September, the seventh straight month of positive returns. Updating the data from Eurekahedge’s flash update earlier in the month, hedge funds gained +0.48% in September, outperforming the MSCI AC World Index (Local) benchmark’s +0.19%. On a year-to-date basis, hedge funds are up 3.33%, while the MSCI AC World Index (Local) are up 3.37% over the same period.
  • Among regional mandates, Japan managers led the table for the month, gaining 1.27% while distressed debt hedge funds lead gains among strategic mandates, gaining 1.12% in September, Eurekahedge noted. North American hedge funds were up 0.93% during the month, outperforming the S&P 500 Index’s +0.12%.
  • Close to 15% of managers posted double-digit returns in excess of 10% in 2016 year-to-date, with long/short equities and CTA/managed futures mandated hedge funds featuring strongly in this pool. Meanwhile, the top North American hedge funds have returned 18% on average for the year, well ahead of the star performers in Asia and Europe that have gained around 8% each. 
  • On a year-to-date basis, Latin American hedge funds lead the table with gains of 17.24% on the strength of the region’s well-performing equity markets – particularly Brazil, which is up a staggering 34.64% year-to-date. 

Eurekahedge’s data was based on 50.56% of funds that reported September 2016 returns as of October 13, 2016. The company tracks asset flows, hedge fund performance and regional key trends across the hedge fund universe, tracking more than 130 data points on more than 24,000 alternative funds in its database.


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