Clients withdrew nearly 1% of all hedge fund assets in December

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Literal hedges – not investing ones

Hedge fund clients continued to pull out their money in December, marking the second-straight month of outflows and quickening the pace of annual redemptions.

Globally, outflows totaled $29 billion in December, up from $4.7 billion in November, and bringing the full-year total to $109.6 billion, or 3.8% of assets, according to the Barclay Fund Flow Indicator. For comparison, in 2018, investors pulled $89.2 billion, or 3.1% of total industry assets, out of hedge funds.

Still, for the full year in 2019, hedge funds saw a trading profit of $261.6 billion.

The strategies with the biggest outflows in 2019 were Equity Long/Short funds, which lost 19.5% of assets, Equity Market Neutral, which lost 17.8%, and Options, which saw outflows totaling 15.1% of assets. Those that did best were Event Driven funds, which increased assets by 19.3%, Emerging Markets – Latin America, up 18.1%, and Macro funds, with inflows that swelled assets by 14.5%.

Flows were also mixed by region. Redemptions in the U.S. were responsible for the bulk of the December outflows, while hedge funds in Latin America, Canada, and continental Europe saw inflows during the month.

Hedge funds returned just 8.66% to clients, in aggregate, in 2019 – a year in which the S&P 500 gained nearly 29%, according to a report released earlier in February. They did outperform the broader stock market in January, however.

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