Research from Preqin Shows Funds Lost $34.4 Billion in Q3

November 29, 2019 | Headlines, Hedge Funds, Investments, News

For the sixth straight quarter, hedge fund outflows surpassed capital inflows.

Research from Preqin shows that the hedge fund industry lost $34.4 billion in the third quarter.

This was the sixth-straight quarter that outflows outpaced inflows. That said, the strong performance across hedge fund strategies have bolstered AUM by 3.5% since the start of the year.

As of October 2019, the Preqin All-Strategies Hedge Fund benchmark posted gains of 8.50%. The research firm says that the benchmark is on track to hit its second-highest annual return since 2013. The report says that total AUM did decline from the second quarter. Total AUM sits at $3.57 trillion.

Research from Preqin on Inflows

All top-level strategies experienced net outflows in Q3 2019 except for CTAs, niche strategies and credit strategies. The latter have recorded net inflows of $14.1bn YTD, an increase of 10.2% in AUM – the highest increase of all top-level strategies.

Furthermore, event-driven strategies experienced the greatest outflows. The strategies shed $15.0 billion in Q3 2019. This outflow has contributed to total outflows of -$24.1 billion in 2019. We’ve seen a net loss in AUM of -7.4% for event-driven strategies funds since January.

Hedge funds located in all geographic regions experienced outflows in Q3 except for North America, which saw net inflows of $10.6billion. Europe and the Rest of the World each recorded investor outflows of $17.9 billion. Meanwhile, the Asia-Pacific region recorded outflows of $9.3 billion.

North America’s overall AUM has increased by 5.0% this year.

AUM in Asia-Pacific and the Rest of the World has decreased by 8.7% and 7.0%, respectively, during the same period.

What’s Driving Investor Influence

Preqin notes that past performance drives investor interest. The data shows that 46% of hedge funds that returned 5.00% or greater in H2 2018, saw net inflows in Q3 2019.

Of firms that returned less than -5.00%, 61% or respondents saw outflows.

For a copy of the Preqin report and associated data, visit here.

Related: Preqin Executive Report: Less than 12% of Senior Roles in Alternatives Are Occupied by Women

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