Marking the fourth consecutive quarter of outflows, $22.1bn left the hedge fund industry in Q1 2019 – and yet, despite this net capital withdrawal, industry assets under management (AUM) grew to $3.56tn due to improved performance, an increase of 3.3% since the end of 2018.
Despite only 37% of credit strategies funds recording inflows, the strategy attracted net inflows of $6.6bn in the quarter. Only macro strategies were able to join credit strategies in positive capital flow territory with a modest $0.1bn. Equity strategies suffered a $9.9bn outflow in Q1, the largest recorded by any top-level strategy tracked by Preqin. In spite of these capital flows, equity strategies still managed to return +7.18% for the quarter, with the strategy’s AUM rising by 6.5% to reach $908.1bn.
Fund managers in Europe and Rest of World recorded positive quarterly inflows of $2.7bn and $8.1bn respectively, helping to increase the latter’s regional AUM by 26.4% to $42.3bn. Elsewhere, despite 41% of North America-based funds recording inflows – the largest proportion of any region – $30.8bn in net outflows fated the region to its first quarterly capital withdrawal since Q4 2017 (-$17.5bn).
Longer-term performance remains a key indicator of a fund manager’s ability to attract new capital. Over a three-year period, 44% of funds with an annualized return of 5.00% or more experienced an inflow, vs. only 17% of those that returned less than -5.00%. Coincidentally, 67% of funds returning less than -5.00% recorded outflows over Q1, in contrast to only 42% of their outperforming counterparts.
For more information on recent hedge fund performance, download your copy of Preqin's Q1 2019 Hedge Fund Asset Flows factsheet.
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