“The picture is not bleak” for hedge funds, eVestment report says
20 February 2023 US
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Hedge funds saw a US$22.6 billion decline in assets in 2022, but these figures “are not as dire as the headlines would indicate,” according to eVestment’s most recent report.
Over the course of December 2022, investors redeemed approximately net $27.3 billion from hedge funds, bringing total assets to an estimated $3.383 trillion.
In June, 60 per cent of reporting managers’ data demonstrated a net outflow. This above-average breadth of outflows is equal to those in March 2020, at the start of the COVID-19 pandemic.
However, eVestment notes that the volume of net outflows was below average. There was a greater focus on removing smaller amounts from a wide range of products than on removing large volumes, along with low rates of new allocations.
The report finds that managed futures funds saw an average 22 per cent return in 2022, with overall positive returns over the course of the year. In spite of challenges around capital raising, eVestment states that “2022 will go down as one of the best years for managed futures funds in recent memory.”
That being said, after being unable to meaningfully outperform global equity markets in 2022, the company states that credit-focused hedge funds will continue to face headwinds in 2023. With private fund structures on the rise, it may be difficult for such funds to raise new assets, the report adds.
Within the macro hedge funds space, eVestment states that estimates of a record-breaking $30 billion in net outflows mean that “on the surface, 2022 looked miserable.” However looking more closely at the data and considering the successful performances of several mid- to large-sized funds over the course of the year shows a more positive picture, the report elaborates.
Concluding the report, Peter Laurelli, chartered financial analyst and global head of research at Nasdaq eVestment, says: “A lot of money left some very large macro products in 2022, but it’s hard to look at the details of the data and think 2022 was really as bad as it appears for the macro strategy. It wasn’t great, and some lost a lot of assets, but overall, the picture here is not bleak.”
Over the course of December 2022, investors redeemed approximately net $27.3 billion from hedge funds, bringing total assets to an estimated $3.383 trillion.
In June, 60 per cent of reporting managers’ data demonstrated a net outflow. This above-average breadth of outflows is equal to those in March 2020, at the start of the COVID-19 pandemic.
However, eVestment notes that the volume of net outflows was below average. There was a greater focus on removing smaller amounts from a wide range of products than on removing large volumes, along with low rates of new allocations.
The report finds that managed futures funds saw an average 22 per cent return in 2022, with overall positive returns over the course of the year. In spite of challenges around capital raising, eVestment states that “2022 will go down as one of the best years for managed futures funds in recent memory.”
That being said, after being unable to meaningfully outperform global equity markets in 2022, the company states that credit-focused hedge funds will continue to face headwinds in 2023. With private fund structures on the rise, it may be difficult for such funds to raise new assets, the report adds.
Within the macro hedge funds space, eVestment states that estimates of a record-breaking $30 billion in net outflows mean that “on the surface, 2022 looked miserable.” However looking more closely at the data and considering the successful performances of several mid- to large-sized funds over the course of the year shows a more positive picture, the report elaborates.
Concluding the report, Peter Laurelli, chartered financial analyst and global head of research at Nasdaq eVestment, says: “A lot of money left some very large macro products in 2022, but it’s hard to look at the details of the data and think 2022 was really as bad as it appears for the macro strategy. It wasn’t great, and some lost a lot of assets, but overall, the picture here is not bleak.”
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