After a positive first quarter of 2017 where investors tiptoed back into hedge funds, April saw a bit of a pause, with investors pulling $930 million from the global hedge fund industry, according to the just-released eVestment April 2017 Hedge Fund Asset Flows Report.
Overall industry assets stood at $3.106 trillion in April and year-to-date (YTD) 2017 asset flows were still positive at $12.18 billion. This is good news, in spite of April’s drawdown, for an industry buffeted by poor returns and asset outflows for much of the previous two years.
Some other interesting points from the report include:
· Among primary strategies, Market Neutral Equity (up $3.19 billion), Directional Credit (up $2.84 billion) and Macro funds (up $1.68 billion) were big winners in asset allocations. Macro funds are among the big winners YTD as well, pulling in $11.58 billion so far this year.
· The continued interest in Macro strategies is evidence that investors are using the industry not just for its increasing prevalence of quantitative strategies, but for expertise on how to navigate, and preferably to benefit, in a global environment increasingly influenced by major geopolitical themes.
· Multi-Strategy and Long/Short Equity strategies were the biggest losers among primary strategies in April, both seeing AUM drop a bit more than $3 billion in April.
· There is evidence of some consolidation among funds, with smaller funds that performed poorly in 2016 seeing AUM fall while strong 2016 performers are seeing more positive asset growth.
· Asset flows for hedge funds domiciled in Europe turned positive in April, increasing by $1.32 billion, while YTD flow were still a negative $0.24 billion.
· Conversely, firms domiciled in the Americas saw AUM fall $1.66 billion, while YTD assets are still up at positive $11.77 billion.