Monday, May 27, 2024

Multi-strategy flows negative YTD after Sept redemptions

  • Fixed income/credit hedge funds again most popular with LPs, but a net $19.2bn leaves industry: eVestment
  • See AFI’s dedicated sections for FLOWS and MULTI-STRATEGY news

Hedge fund outflows deepened in September, with redemptions highest in multi-strategy and only fixed income/credit hedge funds seeing inflows.

Investors removed an estimated $19.2bn from hedge funds last month, bringing year-to-date net redemptions to $68.2bn, according to eVestment.

The industry is now firmly on course for a third consecutive year of net outflows.

Multi-strategy, the hedge fund industry’s key growth area in recent years, had a net outflow of $5.6bn last month, higher than any other sub-strat. Flows are now negative $2.7bn YTD for multi-strat.

September’s data indicates that interest in new allocations to multi-strategy funds has “all but disappeared” as fewer than 20% of reporting funds’ data showed product-level net inflows.

Two years of strong net inflows to multi-strat is at risk of ending in 2023.

Fixed income/credit was a rare area of interest last month, achieving net inflows for a fourth month in five.

The negative flows picture is backed up by data from Citco, which found a $12.7bn net outflow in Q3, and a $1.8bn net outflow from multi-strategy in September.

“There were still some winners in terms of flows, with hybrid funds seeing net inflows of $2.8bn, to make it three quarters of net inflows so far in 2023,” said Declan Quilligan, head of hedge fund services at Citco.