Hedge funds suffered a net $7.8 billion outflows in the second quarter of 2022 as market uncertainty ushered investors to keep their assets risk-free.
Hedge funds investing in equity markets suffered the biggest withdrawals, experiencing $6.4 billion in net outflows.
According to Citco's '2022 Q2 Hedge Fund Report – Quarterly Review', large investors like pension funds, asset managers and family offices pulled more money out of hedge funds than they invested in Q2 of 2022, following a strong performance throughout 2021.
In Q2, 32.81% of hedge funds saw a positive return, 7.4% down compared to Q1.
All categories saw outflows; however, the largest funds suffered the most in net redemptions. Funds over $10 billion saw net outflows of $2 billion, while $5-10 billion experienced $3.2 billion.
Region-wise, all regions underwent net redemptions, with the USA-based hedge funds suffering $6.6 billion in outflows. Europe experienced relatively minor outflows of $200 million.
Financial markets plunged in 2022 amid rocketing inflation and high-interest rates. Minutes released from the July meeting of the Federal Reserve officials, the central banking system of the USA, indicated that interest rates would likely stay high until inflation came down substantially.
The market volatility has led the investors to pull their assets resulting in considerable losses to hedge funds.
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