Hedge funds suffer net $7.6 billion outflows in October – eVestment

By Nell Mackenzie

LONDON (Reuters) – Investors pulled a net $7.6 billion from the hedge fund industry in October, particularly from low performing stock pickers as many of these funds failed to improve their performance from last year, Nasdaq research firm eVestment said on Wednesday.

This was after investors pulled a net $19.2 billion from hedge funds in September.

Hedge funds primarily focused on trading equities reported an average negative 2.7% performance in October and a negative 3% performance so far this year, eVestment said.

October marked a 20th consecutive month of money draining from these hedge funds taking long and short bets on rising and falling equities.

Redemptions, when hedge funds’ customers decide to withdraw cash, mainly centered on these stock picking strategies, said the eVestment report.

This strategy traditionally tallies up to be the largest hedge fund sector, but now is only a touch bigger by asset size than multi-strategy hedge funds, the report said.

Multi-strategy hedge funds now held $677.67 billion in assets, compared with $678.12 billion for the stock-picking funds, the report added.

The 15 stock picking funds with the largest redemptions in 2023 posted an average negative performance of 13.4% in 2022.

Meanwhile, last year’s top performing stock funds, which averaged a positive 4%, saw inflows, the report added.

Investors redeeming money and losing bets accounted for a $20.1 billion decrease in assets under management in October. This shrunk the size of the hedge fund industry to an estimated $3.429 trillion, said the report.

So far this year, the hedge fund industry overall has seen asset outflows of about $75 billion, said the report.

Credit strategies fared far better than others. About half of the credit-focused hedge fund managers reporting to eVestment said that in October, inflows totaled about $400 million, the report said.

(This story has been refiled to remove extraneous tag from the headline)

(Reporting by Nell Mackenzie; editing by Dhara Ranasinghe and Tomasz Janowski)