eVestment: Hedge funds face “a very difficult environment” in H2
03 September 2019 London
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July’s hedge fund asset flows report by eVestment, a provider of institutional investment data and analytics, found that investors redeemed an estimated $8.42 billion from hedge funds in July 2019, bringing year-to-date flows to a negative $55.91 billion, in line with levels seen in 2016.
Through the first seven months of 2016, investors withdrew an estimated $58.1 billion from hedge funds. By the time 2016 had come to and end, investors had withdrawn over $111 billion.
The report’s author Peter Laurelli, global head of research at eVestment, said: “While it is not known exactly how the remainder of 2019 will unfold for the industry, so far it is a very difficult environment for the majority of funds.”
Further highlights from the report indicated that long/short equity flows continue to be highly negative.
According to eVestment, it has been 17 months since investors showed any sort of broad interest in long/short equity funds. Part of the problem has been periodic large losses from the group, which have caused meaningful underperformance of most major equity markets in which they invest.
“There been clear dissatisfaction by investors with products which performed poorly last year, and clear satisfaction with products which did the opposite,” Laurelli noted.
“Unfortunately, the latter group is not large and consequently few long/short equity managers are successfully raising capital in 2019. Only 29 percent of reporting funds have experienced net inflows in 2019.”
Elsewhere in the report, it was noted that emerging market (EM) hedge fund flows were negative in July despite ongoing interest in exposure to China.
eVestment explained that demand for exposure to China was evident, with the products which had been receiving interest continuing to see new allocations, but there was also the pervasive negativity toward many more broad EM strategies and some China-focused equities.
“The result during the month [July] was negative, albeit not aggressively so, which is likely how most managers within the universe would feel about their capital raising efforts in 2019,” Laurelli added.
Through the first seven months of 2016, investors withdrew an estimated $58.1 billion from hedge funds. By the time 2016 had come to and end, investors had withdrawn over $111 billion.
The report’s author Peter Laurelli, global head of research at eVestment, said: “While it is not known exactly how the remainder of 2019 will unfold for the industry, so far it is a very difficult environment for the majority of funds.”
Further highlights from the report indicated that long/short equity flows continue to be highly negative.
According to eVestment, it has been 17 months since investors showed any sort of broad interest in long/short equity funds. Part of the problem has been periodic large losses from the group, which have caused meaningful underperformance of most major equity markets in which they invest.
“There been clear dissatisfaction by investors with products which performed poorly last year, and clear satisfaction with products which did the opposite,” Laurelli noted.
“Unfortunately, the latter group is not large and consequently few long/short equity managers are successfully raising capital in 2019. Only 29 percent of reporting funds have experienced net inflows in 2019.”
Elsewhere in the report, it was noted that emerging market (EM) hedge fund flows were negative in July despite ongoing interest in exposure to China.
eVestment explained that demand for exposure to China was evident, with the products which had been receiving interest continuing to see new allocations, but there was also the pervasive negativity toward many more broad EM strategies and some China-focused equities.
“The result during the month [July] was negative, albeit not aggressively so, which is likely how most managers within the universe would feel about their capital raising efforts in 2019,” Laurelli added.
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