Global hedge fund assets under management (AUM) fell below $3 trillion in the first quarter as investors withdrew capital amid market turmoil.
Investors redeemed $33 billion and, coupled with the market impact of coronavirus, AUM in total declined $366 billion to $2.96 trillion.
The last time AUM in the sector was below $3 trillion was in 2016, according to data from HFR.
The withdrawal was the fourth largest quarterly outflow number in the industry’s history, although it was much lower than in the fourth quarter of 2008 when a figure equal to 16% was redeemed compared to the 1% in Q1.
Performance-based losses totaled $333 billion, as measured by the HFRI Fund Weighted Composite Index’s 9.4% fall – most of it (7%) in March.
Event-driven strategies led the losses, at 15.3%, while the HFRI Macro (Total) Index posted a narrow gain of 0.07%. This includes a 1% gain in March compared to the 23.2% fall in the Dow Jones Industrial Average.
Nevertheless, investors withdrew $22 billion from macro strategies, mainly the $19 billion from quantitative trend-following commodity trading advisor strategies. There were allocations of $3.8 billion to fundamental macro discretionary strategies.
However, opportunities for hedge fund investors will come from securities sold by traditional asset managers, said Kenneth J. Heinz, president of HFR.
“While volatility and market dynamics remain fluid through early 2Q, dislocations created by indiscriminate selling from traditional asset management have created significant opportunities for specialised long/short funds, which are likely to benefit both forward-looking funds and institutional investors in coming quarters.”
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