Investors Pull Money from Hedge Funds
From the Desk of Jim Eccleston at Eccleston Law LLC:
The COVID-19 pandemic is taking a toll on the hedge fund industry. Barclays Capital Solutions is reporting that between $50 billion and $100 billion may be pulled out of hedge funds by investors in 2020. This year could see the largest withdrawal of investor funds from hedge funds since 2008 when investors withdrew $154 billion.
In an interview with Bloomberg News, Kate Holleran, managing director of capital solutions at Barclays, said that “the redemptions we’ve seen so far are liquidity-driven, meaning due to portfolio rebalancing and meeting contractual obligations for funding illiquid alternative investments, versus a frustration with the asset class or its performance.” Holleran also said that that hedge funds did “provide value in the first quarter” and that Barclays found that the hedge funds it researched were flat through the first five months of 2020.
Barclays also found that the most favored strategies for 2020 are distressed credit, sector-specific equity and discretionary macro, while the least favored are generalist stock-pickers, quantitative equity and market-neutral equity.
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