Hedge Fund outflow continues, but slows

Hedge fund outflows totaled $115.7 billion in the first three months of the year. Outflows slowed significantly from the fourth quarter of last year, dropping by 21%, but the first quarter was still the second-worst in terms of outflows in 15 years.

All strategies posted outflows during the quarter, but equity long/short funds were the hardest hit, with $34 billion evaporating. So far, hedge fund managed $1.18 trillion at the end of March, down from $1.29 trillion at the beginning of the year.

The lifting of redemption restrictions is blamed for the continued outflows. It suggested the outflows will continue to slow this quarter, and that hedge fund might actually begin to take in new money by the third quarter. Some larger institutional investors, especially pension funds, are beginning to come back to the hedge fund industry.