Investors flee hedge funds

Graph downThe first quarter of this year was the worst for hedge funds in seven years, with volatile markets, underperformance and falling risk tolerance producing significant redemptions, new figures reveal.

The latest Global Hedge Fund Industry Report, published by Hedge Fund Research (HFR), indicates the total amount invested in hedge funds fell to $2.86 trillion (€2.53 trillion) in the first three months of 2016, with a net total of $15.1 billion being withdrawn by panicked investors.

Event driven strategies were the most significantly impacted, with net outflows of $8.3 billion. The largest hedge fund firms, with assets of over $5 billion under management, incurred the most severe losses, of $10.7 billion. Nevertheless, this group collectively manages 68.3% of all industry assets as of the end of Q1 2016.

Firms managing between $1-5 billion experienced net outflows of $3.6 billion, while firms managing less than $250 million recorded net inflows of $730 million.

HFR president Kenneth Heinz said the current environment continues to be dominated by “intense dislocations, sharp reversals and rapidly shifting correlations across assets.”

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