Hedge Funds Hit by Investor Redemptions for 8th Straight Month
(Bloomberg) — Investors just keep punishing hedge funds.Managers suffered the eighth straight month of client redemptions in October, the longest stretch of withdrawals since the 2008 financial crisis, according to a report from eVestment on Thursday.
Investors pulled about $6.2 billion from the industry last month, an improvement from September. The overall trend continues to be negative — redemptions for the year have now hit $87.9 billion, more than double last year’s total.
Funds are struggling as clients revolt against high fees and subpar performance. Hedge funds have lagged the broader market this year, gaining 6.7% through October, according data compiled by Bloomberg. The S&P 500 Index returned 23%, with dividends reinvested, in that period.
Closures have outpaced new entrants for four straight years, and several marquee names have shut funds or returned investor capital. The latest is billionaire Louis Bacon, who’s planning to step back after 30 years, and returning outside capital in his main macro funds.
Not everyone is feeling the pain. About 45% of funds have posted net inflows, eVestment data show.
Event-driven funds have been a bright spot with inflows of $13.6 billion through October. Managed futures saw allocations for a third consecutive month.
Long-short equity funds had about $41 billion in redemptions this year, followed by macro managers who saw outflows of $23 billion, according to the report.