After a rare month of net inflows in February, equity long/short hedge funds saw investors redeem a net -$2.57bn last month as the industry more broadly saw a net -$9.90bn leave the space, according to Nasdaq eVestment’s latest Hedge Fund Industry Asset Flow Report.
Investors have now redeemed from hedge funds for the 22nd consecutive month. However, Nasdaq eVestement doesn’t seem to think that there is actually a redemption issue; more, an allocation one.
“…what stands out is that the proportions with meaningful outflows are not bad from a historical perspective, but the proportions seeing meaningful net inflows are consistently low. This is why, when we look at the fund-level data, we can say that the hedge fund industry isn’t facing a crisis of redemptions, rather the consistent net
outflows are the result of investors’ reluctance to meaningful new allocations,” it says in the report.
The only category that Nasdaq eVestment tracks that saw any meaningful good news was in managed futures, as these products enjoyed a +$1.14bn net inflow last month.
“While the group’s overall net flow for Q1 was negative, it was nice to see net inflows for managed futures funds in March after what has been a seven-month drought of investor interest. Perhaps the most positive aspect is that this is some vapor of hope that if you can produce relatively pleasing performance and do it in a relatively unique way (at least by asset mix and approach), there are investors willing to give you money, which has been rare recently,” says the report.
For the first quarter of 2024, hedge funds have seen -$25.59bn leave the industry. However, performance has been solid, with the Nasdaq eVestment Hedge Fund Aggregate benchmark delivering +4.56% in Q1.