Hedge funds continue to lose assets under management from a lack of outperformance. The thesis for investing in hedge funds has come under scrutiny in the past few years as investors realize that the excess returns generated by the funds are eaten up by their fees. Last year was supposed to be a stock pickers market, a perfect time for active management to shine, but the average equity hedge fund return as measured by the HFRX Equity Hedge Index was a loss of 2.16%.
Hedge fund inflows declined by roughly 40% in 2015 compared to the previous year, as the under-fire sector continued to post poor performance.
Data firm eVestment estimated a net $66.6 billion inflow for the industry in 2015 to the end of November. This compared to $111.4 billion for the same period in 2014.