The decline of global hedge fund assets under management in 2020 got a reprieve in the second quarter through May 31 as managers rode the recovery in April and May. After losing $264.1 billion in February and March, the asset class added about $59 billion through flows and performance, $50 billion of which was based on returns. Data from Eurekahedge show that investors pulled $85.9 billion from the asset class during the first quarter as the market downturn wiped out $178 billion in value. Total asset value fell $139.6 billion in March alone, or 6% of February's ending balance. As of May 31, total hedge fund assets stood at $2.098 trillion, down from $2.3 trillion at the end of 2019.
Emerging market strategies were the top performer in May, gaining about 6% during the month, more than double that of the next closest subclass, long/short equities (2.7%). The group, however, still has a lot of ground to make up from earlier in the year — the Eurekahedge Asset Weighted Emerging index is down 16% for the year through May 31.
Hedge fund AUM has been trending lower since January 2018, when it peaked at $2.5 trillion. Since then, investors have redeemed a net $337 billion, while aggregate performance has sapped another $94.7 billion. But removing March's net losses from both performance and outflows shows a slightly different picture. After adjusting for the $139.6 billion in performance-based losses and $81 billion in outflows, about $46 billion in investment gains would have been recorded and net outflows would have stood at $256 billion.