Investors added a mere $1.71 billion to the global hedge fund industry in May, according to the eVestment May 2020 Hedge Fund Asset Flows Report, released today. Year-to-date (YTD) flows are still strongly negative at -$34.41 billion and overall industry AUM at the end of May was $3.046 trillion.
While even a small amount of new money shows continued interest in hedge funds among investors, the rise in investor interest in other alternative asset classes, particularly private equity and other private markets investments, could pose a longer term challenge for the hedge fund industry.
“The data in May shows flows were near flat and the volume of asset movement was high,” says global head of research, Peter Laurelli. “This is a sign that new allocations are being made while redemptions persist. This is not how an industry grows and thrives. Hedge fund AUM has hovered near $3 trillion since the middle of 2014. More than anything else, performance has been the primary reason preventing assets from falling.”
The biggest asset losers among primary strategies eVestment tracks in May were Long/Short Equity funds, which saw investor redemptions of -$5.11 billion last month. The story was almost the exact opposite for Macro funds, which saw investors add +$5.10 billion in May. Macro funds, however, remain deeply in the red for asset flows YTD, with investor redemptions of -$14.42 billion for the year.
Event Driven funds were among the other big asset winners in May, pulling in +$3.10 billion in new money. These funds are up +$6.54 billion for the year. This is on top of $11.06 billion in new money Event Driven funds pulled in during 2019, showing continued investor interest in these funds.
Among fund types, Fixed Income/Credit funds were big asset winners, pulling in +$3.39 billion in new money in May. Fixed Income/Credit funds are now just slightly negative in asset flows for the year, at -$680 million.
For a third consecutive month, there have been net inflows into Asia domiciled managers, with another $1.15 billion flowing into Asia-domiciled funds in May. The bulk of new money appears to have gone to managers in Singapore and Hong Kong and to a diverse mix of strategies across Equities, Credit, Macro and Event Driven.
Hedge funds focused on emerging markets investment regions pulled in +$5.28 billion in new investor money in May. All other funds investing in specific regions that eVestment tracks were also in the green for asset flows in May, while funds that focus on global investment opportunities saw investor redemptions of -$3.81 billion last month.