Hedge funds see second month of outflows in May

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The With Intelligence data report for May reveals that the hedge fund industry experienced net outflows of USD0.3 billion in May, extending the negative streak to two consecutive months after the USD23 billion outflow in April pushed year-to-date flows into negative territory.

Recession fears ramped up over the month as the US Federal Reserve embarks on an aggressive campaign to hike interest rates to force price increases to slow down. The US consumer price index accelerated to 8.6 per cent year-over-year in May, the highest level since December 1981, prompting the Federal Reserve to announce a further 75bps hike on June 15 with a potential for a further 75 or 50bps move at the next policy meeting in July.


Key highlights from the report include the hedge fund industry experienced net outflows of USD0.3 billion in May, and USD2 billion in net outflows YTD, with 60 per cent of funds having had net outflows.


The hedge fund industry had a promising start to 2022, with the Q1 2022 inflow of USD21.3 billion almost offsetting the USD21.8 billion outflow suffered in Q4 2021 but fell deeply into negative territory after experiencing USD23 billion of outflows in April.


Long/short equity funds suffered net outflows (-USD11.1 billion) for a second consecutive month as investors target diversification away from stock-based strategies. Despite high net outflows from long/short equity, 44 per cent of funds in the strategy have had inflows this year.


Net inflows worth USD16.8 billion across multi-strategy, fixed income/credit and managed futures could not turn May flows positive. Multi-strategy and managed futures have been consistently recording inflows every month since the start of 2022.


Macro (-USD2.4 billion) and event-driven (-USD3.5 billion) experienced net outflows for the second and third consecutive month respectively, pushing overall asset flows in May into negative territory.


Multi-strategy attracted the largest inflows of USD6.3 billion, extending their streak of consecutive monthly positive flows to five months. Over the past 12 months, multi-strategy (USD32 billion) and managed futures (USD21billion) accounted for the lion’s share of inflows while L/S equity (-USD55.8 billion) fared the worst.


North America posted USD2 billion of inflows while Europe and Asia-Pacific suffered net outflows of USD25.5 billion and USD8.5 billion over the past 12 months, respectively.


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