Daily Management Review

HFR Report Says Global Hedge Fund Sector Lost Assets Worth $125 Bln In 2022


HFR Report Says Global Hedge Fund Sector Lost Assets Worth $125 Bln In 2022
Hedge Fund Research (HFR) data showed on Friday that nearly $125 billion in assets left the hedge fund industry due to performance losses in 2022, the latest sign of the havoc that volatility wreaked on the industry last year.
Investors reconsidered investing in hedge funds, resulting in a net outflow of $55 billion in assets, the largest capital flight from the industry since 2016, according to HFR.
This is a significant change from 2021, when the industry saw a net inflow of $15 billion.
High inflation, aggressive central bank interest rate hikes, and Russia's invasion of Ukraine roiled global markets last year, forcing investors across asset classes to navigate unprecedented volatility.
Investors withdrew $40.4 billion from hedge funds that buy and sell stocks, which also had the worst performance numbers, losing $112.5 billion.
Despite the combined strong performance of funds that trade on macroeconomic indicators, institutional investors withdrew $15 billion from these funds, according to the data firm.
The only hedge fund strategy that saw an increase in investor money was event-driven mergers and acquisitions and credit funds, which received $4.3 billion.
According to HFR, the size of the hedge fund industry increased by $44 billion in the fourth quarter to $3.83 trillion.
"Strategies which have demonstrated their ability to navigate the current extreme market volatility are likely to attract capital," said Kenneth J. Heinz, president of HFR.
The hedge fund industry had a difficult year last year due to market volatility. According to the HFRI 500 Fund Weighted Composite Index, which tracks many of the largest global hedge fund performances, funds fell 4.2% overall. That was the worst showing since 2018. learn more Last year, equity strategies dragged down hedge fund returns, which fell 10.21% but still outperformed the S&P 500 (.SPX), which fell 19.4% in its worst year since 2008.