April hedge fund weeding means “strongest will survive”

Hedge-fundNet outflows from hedge funds in April reached their highest level since October 2016 - but this is a positive trend that means the fittest will survive, an investment analytics provider has said.

Nearly two thirds of reporting managers experienced some net outflows in April, according to eVestment’s monthly ‘Hedge fund industry asset flow report’.

Net flows of investor capital into hedge funds remained “firmly positive” for the year and “slightly positive” for April as investors allocated an additional $1.78 billion (€1.51 billion) to hedge funds during the month, bringing year-to-date flows to the industry to $13.67 billion.

April outflows were generally small and were outweighed by new funds coming into the industry. Also, among firms that faced redemptions there was not a large proportion that lost a significant level of assets. In fact, fewer than 20% of managers lost greater than 2% of their assets under management from outflows in April, below the 18-month average.

The report said that while the outflows were cause for concern in certain segments, it was also a positive theme for the industry.

“The strong should survive and prosper for the greater long-term health of the pack, and this appears to be exactly what is happening in 2018,” eVestment said.

Total industry assets under management were $3.316 trillion at the month-end.

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