GLOBAL – Investors pulled more than $1bn from hedge funds-of-funds in the third quarter, according to Hedge Fund Research which tracks the market.
And inflows to hedge funds themselves are the lowest for more than a year.
“Funds-of-funds saw an outflow of more than $1.2bn (€1bn) in assets in the third quarter,” HFR said. This compares to inflows of $3.5bn in the second quarter and $6.2bn a year ago.
And HFR said that new flows to hedge funds slowed to $9.4bn in the quarter – down from $10.9bn in the second quarter and $16.9bn a year ago.
But it said that average third quarter returns rose to 5.38%, up from 1.12% in the previous quarter.
It said: “This compared to returns of 3.61% for the Standard & Poor’s 500 and 6.58% for the MSCI World during the same period.”
The HFRI Composite index is up more than 7% for the year, with total hedge fund assets standing at $1.1trn.
“It’s no secret that hedge fund returns have been mixed for the first half of the year, and that has almost certainly kept some investors on the sidelines,” said HFR president Joshua Rosenberg.
“This caution is reflected in the continued decline in asset flows which we’ve seen now for three consecutive quarters.”
“Recent returns have picked up, however, and some hedge fund managers believe that market volatility is returning as well. Both factors should draw increased investor interest to the sector going forward.”