A report says that redemption pressures continue on a sector, even though one performance benchmark shows the best start to a year since 2012.

A study finds that investors put $1.69 billion into hedge funds in February but there has still been a net outflow from the sector so far this year, according to eVestment.

The report said that after “low” performance in 2018, investors are “fleeing” from macro and managed futures strategies, with two thirds of reporting managers seeing redemptions pressures in 2019. Long/short equity strategies continue to see redemptions in 2019, although to a lesser degree than in January. 

“However, while flows have generally been disappointing, individual products have performed quite well, with multi-strategy funds emerging as a preference for investors in 2019, with continued strong performance from January,” the firm said.

The performance of hedge funds in recent years has taken the shine off an industry that until the 2008 financial crisis, had impressed some investors with an ability to eke out returns even when conventional markets lost ground. The old “two-and-20” charging model has come under pressure (2 per cent annual management fee and 20 per cent performance fee). However, recent data has given ground for encouragement, some practitioners say. The Hedge Fund Research HFRI Fund Weighted Composite Index was up by 4.9 per cent in the first two months of the year, the strongest start to a calendar year registered in that index since 2012. 

eVestment said it has seen a “clear preference” for large managers in the space, with the top ten largest inflows seeing average returns of over 3 per cent, and all but one product being positive in 2018.

“The largest sources of outflows in February and YTD 2019 have been from managers which produced negative results in 2018. Given a broadly negative industry in 2018, that may not sound like much of a surprise. However, in every category where negative 2018 performers have had large redemptions in 2019, there are funds which performed well, and have been able to generate inflows this year,” eVestment said.