In the first quarter of 2016, the outflow of funds of hedge funds globally were $15 billion, according to the report, the research firm HFR. This is the worst figure for the last seven years — more investors withdrew from hedge funds in the second quarter of 2009. In addition, for the first time since 2009 the volume of investments in hedge funds declined for a second consecutive quarter.
In comparison with total capital available to the hedge funds, derived sum is not so great — in the first quarter of 2016 only management was $2,86 trillion.
The capital, which is at the disposal of hedge funds decreased primarily due to the loss of $7.3 billion to those funds that are guided by the makrostrategy, that is profit-driven from major political and economic changes in various countries, as well as $8.3 billion withdrawn from funds that operate in the framework of the strategy “reactions to events” (investors are buying shares or selling merger, acquisition or corporate restructuring affecting the stock price). Investors simply are unable to respond to sharp fluctuations in global stock markets, says The Financial Times.
In addition, investor decisions to reduce investment in hedge funds was affected by the high commissions offered by asset management companies. The funds charge 2% of the amount invested and 20% of the obtained profit. In particular, it is the “exorbitant fee” hedge funds motivated the reduction of its investment program of $1.5 billion of new York pension system.
In addition, because hedge funds withdraw funds sovereign investment funds of oil-producing countries. Sovereign wealth funds seek to minimize their costs in terms of cheap oil and refuse from outsourcing in the investment.