Long Short Equity Hedge Funds See First Net Inflow In Two Years in February

Long short equity hedge funds saw their first new inflows in two years in February, adding $1.52bn in investor capital to their AUM, according to Nasdaq eVestment’s Hedge Fund Industry Asset Flows Report for February.

The news is welcome for the category, as the past 23 months have seen approximately $70bn removed from these products; 2022 saw a net -$38.02bn leave the space, followed by -$34.49bn in 2023.

Other category winners in February were directional credit and multi-strat, which added $1.26bn and $1.22bn respectively. Macro was the laggard, with a net -$3.11bn leaving those products. There’s more to this than meets the eye, however.

“There are large and isolated redemptions taking place within the macro universe. These net outflows are skewing the picture for all macro funds, and they are also the reason we’re talking about this February being a negative month for the industry and not a positive one. Performance has also been an issue. It has lagged the overall industry, and lagged their managed futures cousins, which is likely an issue weighing on the universe’s flows,” says the report.

The withdrawals in macro meant that overall, hedge funds saw a net redemption of -$0.78bn in February. However, the industry at large saw overall assets increase $74bn, due to performance gains; the Nasdaq eVestment Hedge Fund Aggregate index was up 2.19% in February, taking hedge fund industry assets to approximately $3.588trn.