Investors yanked $33 billion from hedge funds during first quarter

More On: Coronavirus

Hedge funds just weathered what might be their worst month ever, with some of the industry’s biggest names getting hit the hardest. Panicked investors yanked roughly $33 billion from hedge funds during the first quarter as the coronavirus pandemic rocked the global economy. Data from Hedge Fund Research released late Wednesday shows that net outflows …

Hedge funds just weathered what might be their worst month ever, with some of the industry’s biggest names getting hit the hardest.

Panicked investors yanked roughly $33 billion from hedge funds during the first quarter as the coronavirus pandemic rocked the global economy.

Data from Hedge Fund Research released late Wednesday shows that net outflows — the industry term for clients taking their money back — were the highest they have been since the summer of 2009, when the economy was still reeling from the last financial crisis and the industry watched $42 billion get pulled back.

Based on data seen by The Post, the majority of the outflows in the most recent quarter occurred in March, making it one of the most painful periods in hedge-fund history.

“Investors reacted to the unprecedented surge in volatility and uncertainty driven by the global coronavirus pandemic with a historic collapse in investor risk tolerance and the largest capital redemption from the hedge fund industry since post-Financial Crisis,” said HFR president Kenneth Heinz in a statement accompanying the report.

HFR’s data also revealed a “The bigger they come, the harder they fall” trend with $20.6 billion of the quarter’s outflows being made from funds managing $5 billion or more.

Hedgie titans like AQR’s Cliff Asness, Bridgewater’s Ray Dalio and Renaissance Technologies’ Jim Simons have all watched their massive funds shrink noticeably in the face of the pandemic.

As reported by The Post, Asness — who managed $186 billion at the end of 2019 — saw his assets under management shrink by $43 billion in the first quarter thanks to a mix of performance and redemptions.

While this is a bad signal for hedge funds as a whole, some smaller asset managers see this as a cleansing fire for an industry that has been needing a change for some time. The hope is that a global pandemic and accompanying financial crisis will open investor eyes to new strategies not being offered by the brand-name funds that dominated the post-2008 recovery.

“People keep talking and complaining about how bad hedge funds have performed for years now, but it’s the same people that keep giving them money — or at least not taking it away,” said Max Nissman, a managing member of Linnis LLC. “I’m glad people are waking up finally, but unfortunately I think they are still too groggy to see where the real value is.”