Hedge funds have already bled 50% more money this year than in all of 2018, as the industry struggles to win back investors fed up with high fees and poor performance.
Investors yanked $8.4 billion in July, bringing net outflows this year to $55.9 billion, according to an eVestment report on Thursday. That’s up from $37.2 billion for all of last year.
Investors’ frustration with hedge funds continues to mount, driving down management and performance fees to well below the “two and 20” fee model once considered standard, according to Eurekahedge. More hedge funds have shut than started in each of the last three years, and those that do launch are far smaller than they were before the financial crisis.
The pain for hedge funds isn’t spread evenly, with 37% of funds posting net inflows this year. So-called event-driven funds have fared the best, with inflows of $10.3 billion through July, eVestment data show. These funds try to cash in when events such as mergers, takeovers and bankruptcies lead to a temporary mispricing of a company’s shares.
Long/short equity funds are having the hardest time, with net outflows this year of $25.5 billion, according to the report.
© 2019 Bloomberg L.P.