Global investors redeemed $5 billion from hedge funds in July, according to eVestment.
Still, the month ended in the black, as positive performance increased assets under management by an estimated $16 billion, bringing total hedge fund assets to $3.1 trillion.
With July’s outflow, investors have allocated some $64 billion to hedge funds year to date. This compares with inflows of $102 billion in the first seven months of 2014—though investors redeemed nearly $14 billion in the final five months last year, eVestment said.
Event-driven strategies took the biggest hit in July, hemorrhaging $5.2 billion.
eVestment reported that last month’s biggest redemptions came from funds that had opened the year with big losses. The average decline in January from funds with the biggest redemptions in July was 4.2%.
It said outflows from this group were evident in both June and July, leaving it unclear whether redemptions were a near-term or slightly longer-term factor in periods of elevated losses.
Credit hedge funds had to return $4.8 billion to investors in July. This likely owed to a six months of performance losses, stretching from last August to January, according to eVestment.
It said that in the months immediately following that period, flows remained positive, but noted that the redemption cycle for credit strategies is typically longer than for more liquid or perhaps less levered strategies.
eVestment said recent allocation/redemption trends were very similar to late 2009, giving the sense that investors are very concerned with global equity and credit markets.
It said that although investors may expect hedge funds to provide relief from those markets’ downturns compared with traditional long-only strategies, the recent flow trend suggests they have been assuming a wait-and-see attitude at best.
Where Investors Wound Up