Investors pull $15bn from hedge funds

UK-Currency-Money-Coin-Pounds-GBP-700x450Hedge funds have seen their worst quarter in seven years with investors pulling more than $15bn (£10.4bn) amid volatile markets and falling investors’ risk tolerance.

The total amount invested in hedge funds fell to $2.86tn in the first three months of 2016, marking the first consecutive quarters of outflows since 2009, according to HFR.

The largest redemptions in the sector for the first quarter came from macro strategies, which saw investor outflows of $7.3bn and event-driven funds, which saw $8.3bn was pulled.

HFR president Kenneth Heinz says: “The hedge fund industry began 2016 with a fractional decline as widely-anticipated asset outflows associated with manager-initiated return of investor capital and private family office conversions were only partially offset by new investor allocations in 1Q.

“The volatile performance environment continues to be dominated by intense dislocations, sharp reversals and rapidly shifting correlations across assets, with the recent realised volatility resulting in an improved opportunity set and wider arbitrage deal spreads. These are likely to contribute to performance gains as investor capital is re-allocated into funds and strategies positioned for this environment through mid-year.”