Written by eVestment

The continued positive aggregate returns to start Q4 lifted hedge fund assets to another all-time high, despite net flows in negative territory for a second consecutive month. On a net basis, outflows were small again in October, but the industry felt redemption pressures more broadly than much of the year. Allocations and redemptions were highly concentrated, more so than any other month of 2017.

At the strategy level, there was a mixed bag of trend halts, shifts, and resumptions. Notably, interest in managed futures strategies rose, while macro redemptions continued. Credit/fixed income market exposure (both developed and emerging markets) continues to be an area of high interest to investors not only within the hedge fund space, but from institutional investors in traditional long-only strategies.

Highlights

  • Despite redemptions of $2.9 billion from hedge funds in October, performance gains again lifted the industry to an all-time peak AUM.
  • Managed futures’ 3-month streak of redemptions reversed in October.
  • Macro fund outflows continued amid lingering redemptions related to Q2 performance losses.
  • Steady demand for market neutral equity has pushed the strategy to be among 2017 leaders.

    • Flows Slightly Negative to Start Q4, Managed Futures See Interest

    Investors withdrew an estimated $2.94 billion from hedge funds in October. Net flows into the industry for the year are now $33.26 billion. Performance gains offset redemption pressures for a second consecutive month, lifting total industry AUM to another new all-time high.

    Key Points

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