Investors continue to build cash positions as fear of slow down builds

August 2019 redemptions from hedge fund hit $6.51 billion for global hedge funds, according to eVestment’s newest asset flows report. The additional outflows drove the total withdraws from hedge funds to negative ($63.61) billion in 2019.

The report also indicated that performance has fueled a decline in global AUM to $3.259.

Recap of August 2019 Redemptions

We’ll start with the good news first. Event-driven funds saw an uptick in capital inflows for the month. The report shows a gain of $2.59 billion for the strategy. That additional capital puts total investments into these funds at $13.28 billion in 2019.

Meanwhile, allocations to Managed Futures Funds hit $1.5 billion in August. Other strategies like Convertible Arbitrage, Market Neutral Equity, Distressed Credit, and MBS Strategies, also saw positive allocations in August.

The biggest losers for the month were Macro hedge funds, which shed -$6.18 billion and Long/Short Equity funds, which lost -$5.33 billion. in August dwarfed inflows. It’s been a brutal year for Long/Short Equity funds. They have now seen total outflows of -$31.14 billion so far this year.

Building Cash Stakes

As we noted this morning in the DailyAlts Playbook, family offices have been cutting back on investments, converting to cash, and deleveraging.

The new UBS and Campden Wealth Report indicates that family offices are realigning their strategies to protect against a slowdown in 2020. Roughly 42% of respondents were building cash reserves. About 22% were cutting leverage exposure.

As we noted on August 22, investors have been heading for the exits over the last few months.