Hedge funds hit AUM high despite $28bn of outflows in Q3
Hedge funds' assets under management (AUM) rose to a new high of $2.97tn despite withdrawals of over $28bn in Q3. The HFRI Fund Weighted Composite Index was up 2.9% over the quarter, boosting AUM, but lagged the benchmark S&P 500 which gained 6.4%. Data from Hedge Fund Research showed the $28bn was the largest quarterly outflow since the depths of the financial crisis in 2009, taking this year’s total outflows to $51.5bn. Larger well-established firms and event driven strategies bore the brunt of redemptions in Q3.

It has been a bruising year for hedge funds. Big bets have been disastrous, investors have voiced discontent and some managers have been forced to rewrite their playbooks or call it quits.

And now, there is new data to rub salt into the industry’s wounds: Over the last three months, investors pulled $28 billion out of hedge funds, according to the research firm Hedge Fund Research. It is the biggest quarterly outflow of dollars since the depths of the financial crisis in 2009.

So far this year, more than $50 billion has flowed out — much of that from the industry’s biggest and best-known funds, Hedge Fund Research said in its latest industry report, released on Thursday.

Among this year’s biggest losers are firms tarred in recent months by scandal.

In June, the multibillion-dollar hedge fund Visium Asset Management told investors it would wind down after several employees were charged with insider trading and with conspiring to inflate the value of certain stock positions to extract a bigger payout from investors. One of the employees, Sanjay Valvani, was found dead in an apparent suicide one week after the charges were leveled against the firm.