Investors Removed $111 Billion From Hedge Funds During 2022

Hedge-fund redemptions in 2022 surpassed Nasdaq eVestment’s own estimates for the asset class. The data company previously approximated that full-year total withdrawals would be around $100 billion, contending it was unlikely that 2022 net outflows would surpass the record levels set in 2016 ($112 billion) or 2019 ($102 billion).

In the end, 2022 bested one of the two, as $111 billion left hedge funds, making it the second-largest annual redemption from the sector in history.

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In December 2022 alone, an estimated $27.3 billion was removed from hedge funds, although strong investment performance helped nullify some of the overall loses. Total hedge fund assets fell to $3.383 trillion, 3.5% of global GDP, indicative of a loss of $22.6 billion in December after redemption and gains on investment were tabulated.

All hedge fund strategies saw outflows in December 2022, aligning with historical trends for December.

Despite the high level of redemptions in 2022, certain strategies saw inflows over the course of the year. Multi-strategy funds attracted $5.84 billion of inflows, while managed-futures funds led all strategy types by pulling in $6.24 billion of inflows in 2022.

The best-performing strategies of 2022 were managed futures, alternative risk premia and macro-based strategies, returning 9.57%, 7.76% and 4.34%, respectively.

Similarly, long-short funds had a tough year in 2022 in performance and capital raising, and eVestment’s analysis states that “asset-weighted returns indicate the group did not meaningfully outperform global equity markets in 2022, which could make 2023 another difficult year for raising new assets [in the strategy].”