Hedge Funds See Largest Drawdowns In Q1 In More Than A Decade

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For the first quarter of 2020, investors withdrew a net $33 billion, or 1% of the global industry capital of $2.96 trillion, from hedge funds, Bloomberg reported, citing a Hedge Fund Research Inc. report released Wednesday. The highest quarterly outflow of $42 billion was recorded in the second quarter of 2009.

"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 the post-financial crisis," HFR President Kenneth Heinz said in the report.

Funds run by industry big names like Ray Dalio, Michael Hintze, and Adam Levinson also suffered major setbacks as investors took back $2.6 billion from firms managing assets worth more than $5 billion.

Funds managing between $1 billion and $5 billion in assets were shrunk by $11 billion, and $1.6 billion was withdrawn from funds that have less than $1 billion under management, according to Reuters. 

Despite the market volatility, a few hedge funds like Jim Simons' Renaissance Technologies recorded a 39% surge through its flagship Medallion fund in 2020 until April 14, The Wall Street Journal reported.

Others, like Bill Ackman's Pershing Square, recorded an 11% gain in March at a time when 75% of hedge funds posted losses in the same month amid the COVID-19 pandemic, Business Insider reported.