(Bloomberg) -- Hedge funds suffered almost $98 billion in net outflows in 2019, the most in three years, as managers trailed the stock market rally.
Investors pulled more than $16 billion from the industry in December alone, capping a year that saw the longest stretch of monthly client withdrawals since the 2008 financial crisis, according to data compiled by eVestment. The redemptions equal about 3% of industry assets and are almost triple the $37.2 billion in outflows seen in 2018.
Hedge funds are under pressure as investors revolt after years of high fees and lackluster performance. Closures have outpaced openings in a difficult fundraising environment, and marquee names including billionaire Louis Bacon have shut funds or returned client capital.
The spike in redemptions came as the industry lagged behind the S&P 500 Index, which returned 31% last year with dividends reinvested. Hedge funds on average gained 9.2%, according to data compiled by Bloomberg.
Even the year’s top-performing strategy, equity funds, ended 2019 with outflows of $27.5 billion. Two strategies to see inflows were event-driven and mortgage-backed securities, bringing in $16.5 billion and $10.9 billion for the year, respectively.
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