The hedge fund industry ended the first quarter of 2024 with net outflows totaling $25.6 billion, marking the 22nd consecutive month investors have yanked cash from the asset class, according to the latest data from Nasdaq eVestment.
Long/short equity managers led the quarter with $8 billion in net outflows, followed closely by macro specialists with $7.4 billion in outflows.
But positive hedge fund performance helped buoy the industry. Hedge funds on average returned 4.6% during the first quarter. Overall assets under management rose to the highest level tallied to date at about $3.64 trillion, according to Nasdaq eVestment.
“The hedge fund industry isn’t disappearing, going away, it just has an allocation problem,” said Peter Laurelli, head of research at Nasdaq eVestment. “Investors are not wanting to increase their exposures to a lot of these segments.”
One bright spot during March was managed futures strategies, which saw net inflows of about $1.1 billion. Managed futures funds did, however, still see net outflows for the quarter of $1.8 billion.
While multistrategy hedge funds saw $2.3 billion in outflows during the first quarter, the segment has continued to grow and now accounts for $704 billion in assets under management.
“(Multistrategy) performance has been good, asset levels are at an all-time peak, in that space where there is a lot of money you likely have investors who are pretty satisfied with the investments they made … and for the managers, they might be losing pockets of assets here and there but overall assets remain pretty high,” Laurelli said.
While long/short equity funds remain the industry’s largest segment at $759 billion in assets, Laurelli noted that “there are just no new meaningful allocations coming in.”
