BlackRock, the world’s largest asset manager, has been losing billions of dollars in assets from its hedge funds for years. Since the second quarter of 2022, BlackRock has had net outflows of more than $15 billion in liquid alternative assets, which include hedge funds and hedge funds of funds.
In the second quarter of 2024, BlackRock had redemptions of a little more than $1 billion in liquid alternative assets, according to its financial statement, and the firm reported net outflows of $1.9 billion in those assets during the first quarter.
Total hedge fund and hedge funds of funds assets were $75.48 billion at the end of the second quarter, down from $87.35 billion at the end of 2021. That means that BlackRock’s hedge funds and funds of hedge funds assets have declined 13.5 percent since then. And that’s after performance gains of $5.3 billion during the same time period.
With BlackRock’s total $10.6 trillion in assets under management — which are up $1.2 trillion over the past year — hedge funds represent a tiny portion of its business. And the firm has had more sizeable net outflows in other products from time to time. But hedge funds are the only asset class in which it has had net outflows every quarter starting with the second quarter of 2022, according to its financial statements.
Last year, BlackRock reported net outflows of $11.37 billion in liquid alternatives, which “reflected redemptions from direct hedge funds, mainly from retail event-driven and multi-strategy credit funds. Direct hedge fund strategies include a variety of single- and multi-strategy offerings,” according to its annual report.
Even with the redemptions, BlackRock’s hedge funds are among the largest in the world. At the end of 2023, its hedge funds had $46.32 billion in assets under management, with another $27.92 in hedge funds of funds. Globally, its hedge funds ranked ninth in size, behind TCI Fund Management and the same as AQR Capital Managment, according to With Intelligence’s Billion Dollar Club.
BlackRock is certainly not the only institution to be hit with hedge fund redemptions. Beginning in 2022, when the tech rout roiled many hedge funds, investors pulled $64.9 billion out of the total universe of hedge funds, according to Hedge Fund Research. But that is about 1.5 percent of the total $4.3 trillion in hedge fund assets globally. So far this year, hedge funds have received net inflows of $7.18 billion — for the first time since 2021 — at a time when BlackRock was still losiing such assets.
While hedge funds aren’t a big part of BlackRock, according to the firm it has been in the business since 1996 and offers a wide range of hedge fund strategies, including fundamental and systematic equity hedge funds in a number of global markets, multistrategy, and relative value fixed income strategies, along with global macro and multistrategy funds.
Moreover, BlackRock is continuing to add assets in its illiquid alternatives business, which includes private equity, real estate and infrastructure. At the end of the second quarter, BlackRock had $137.9 billion in illiquid alternatives, after net inflows of almost $2 billion.
In 2023, thanks to the stability of BlackRock’s illiquid alternatives business, the entire set of alternative assets generated a combined $2 billion of net inflows.
BlackRock declined to comment.