Hedge funds experienced net outflows of $7.8 billion in the second quarter of 2022, as market volatility prompted investors to keep their assets risk-free.
Hedge funds that invest in equity markets saw the most outflows, totaling $6.4 billion in net outflows.
According to Citco's '2022 Q2 Hedge Fund Report - Quarterly Review,' significant investors such as pension funds, asset managers, and family offices withdrew more money from hedge funds than they invested in the second quarter of 2022, following a great performance in the first half of the year.
In the second quarter, 32.81% of hedge funds achieved a positive return, a 7.4% decrease from the first quarter.
Outflows occurred in all categories, but net redemptions were greatest in the largest funds. Funds with more than $10 billion witnessed net withdrawals of $2 billion, while those with $5-10 billion experienced $3.2 billion.
Net redemptions occurred in all countries, with US-based hedge funds experiencing $6.6 billion in withdrawals. Europe experienced only $200 million in outflows.
Financial markets plummeted in 2022 as inflation and interest rates skyrocketed. Minutes from the July meeting of the Federal Reserve officials, the United States' central banking system, showed that interest rates would likely remain high until inflation fell significantly.
Market instability has caused investors to withdraw their holdings, resulting in significant losses for hedge funds.
By fLEXI tEAM