Asset Flows Update

Hedge funds helped investors benefit from the global equity markets uptick in October gaining 1.3% during an encouraging month that also saw the S&P 500 up 8%. Despite this, hedge fund industry AuM declined for the seventh consecutive month, falling $3.8bn, which extended the YTD decline to $207bn. Europe ($3.4bn) accounted for most of the AuM decline, driven by rising risk-off sentiment as the European Central Bank moved to raise interest rates to combat soaring inflation, which hit a record high of 11% in October. By strategy, macro hedge funds posted the largest AuM decline of $11.8bn, driven by net outflows of $8.3bn as investors seek safe-haven assets amid rising interest rates, US-China friction, and soaring commodity prices. Long/short hedge funds bucked the overall negative trend to post an AuM growth of $5.4bn as performance-based growth of $3.9bn reversed previous months’ results despite the ongoing challenging market conditions.

Asset flows data since January 2021

Key highlights for October 2022:

  • Hedge fund industry AuM declined for the seventh consecutive month in October, falling $3.8bn.
  • YTD industry AuM decline increased to $207bn driven by $62bn of performance-based decline and $145bn of net outflows.
  • By strategy, macro recorded the largest ($8.3bn) outflows in October.
  • In sharp contrast to September, long/short equity saw inflows ($1.6bn) and a significant uptick in performance of $3.9bn in October.

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