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Written by Nell McKenzie
LONDON (Reuters) – Investors withdrew more than $100 billion from hedge funds last year, the second consecutive year of outflows of this size, Nasdaq Investments reported on Tuesday.
Investors withdrew about $26 billion from hedge funds in December alone, the largest monthly amount in 2023, according to a report by the data firm.
This brings total outflows to $103 billion last year and $112 billion in 2022, the report said.
However, the industry is still growing, the data company said.
Hedge fund assets – a combination of investor capital, leverage and performance growth – have increased in four of the past five years, the report said.
The hedge fund industry’s assets under management (AUM) grew by 3.2% year-over-year to an estimated $3.5 trillion in 2023, according to the report.
Over the past five years, the industry has grown at an annual rate of approximately 2%, including a 6.5% decline in assets under management in 2022, the report said.
According to Nasdaq Investments, the difference in hedge fund trades between bonds raised in 2023 was $4 billion, the largest amount ever flown into a hedge fund strategy, and the difference in hedge fund trades between bonds raised in 2023 was the highest ever inflows into a hedge fund strategy, with the difference in hedge fund trades between bonds raised in 2023. This is a significant increase from the previous $5.5 billion.
An estimated $35 billion was withdrawn annually from hedge funds that bet on stocks, making it the largest strategic outflow in 2023.
According to Nasdaq Investments, $25 billion was lost last year from event-driven hedge funds, which often trade off merger and acquisition deals.
(Reporting by Nell Mackenzie; Editing by Dhara Ranasinghe and Ros Russell)
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