Investors yanked $25.2 billion from hedge funds in July alone

Broadly speaking, it’s been a brutal summer for hedge funds.

Hedge funds have continued to suffer from sizable redemptions, with investors yanking another $25.2 billion in the month of July alone, bringing year-to-date outflows to $55.9 billion, according to a new eVestment Hedge Fund Asset Flows report.

In June, investors pulled $23.5 billion from hedge funds, the report noted.

If this keeps up, the hedge fund industry could be track for its first year of net outflows since the financial crisis.

“In terms of cumulative magnitude, the redemption pressures facing the hedge fund industry in the last two months are reminiscent of the second half of 2011, when in a four month span investors redeemed an estimated $42.0 billion. Unless these pressures recede, 2016 will be the third year on record with net annual outflows, and first since the outflows in 2008 and 2009, a result of the global financial crisis,” eVestment’s Peter Laurelli wrote in the report.

Credit and multi-strategy hedge funds funds saw “crisis-like” level redemption pressures. Event-driven funds also saw money depart.

The funds with the biggest redemption have returned an average of -4.1% year-to-date, the report noted.

“There should be caution when classifying the industry as a whole, as it is more a sum of very unique parts,” Laurelli wrote.

The hedge fund industry, which has just shy of $3 trillion in assets, is made up of more than 10,000 different funds with different strategies ranging from long/short equity, macro, event, multi-strategy, activist, managed futures, direct-lending, etc. Some strategies and individual funds have done well in 2016.

“Many funds have received new allocations in 2016, including both June and July. The ten largest allocations in the last two months have gone to funds which have produced an average return of nearly 7% this year, and produced positive returns on average in 2015. That we are forced to illuminate positive sentiment in the proverbial ashes, only illustrates the difficulty faced by many,” the report said.

Commodities funds have continued to be a bright spot, attracting new allocations in June and July. In July, investors added $2.7 billion in new allocations. In the last fourteen months, commodity funds have seen approximately $10.3 billion added, the report said.

Generally speaking, hedge funds have struggled to beat the market, with the average fund tracked by the Barclay Index up 2.73% this year, while the S&P 500 has gained around 7%.

Julia La Roche is a finance reporter at Yahoo Finance.

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