Investors pulled $98 billion from hedge funds last year, the largest outflow the industry's seen since 2016

It marked the worst year for hedge fund redemptions since 2016, according to the report.
Hedge funds returned about 9.2% in 2019, according to Bloomberg data , while the S&P 500 gained 31%.
Going forward, there will continue to be assets invested in hedge funds, "but win-rates, the measure of broad enjoyment of new money, have likely peaked," according to the report.
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Hedge funds had a rough 2019, and investors noticed.

Over the course of the entire year, investors pulled nearly $98 billion out of hedge funds, according to a Thursday report from eVestment. In December alone, investors redeemed about $16.21 billion from hedge funds, the report showed.

The negative year-to-date net flows were the largest in the industry since 2016, and accounted for roughly 3% of total assets under management in the industry, according to the report. It also marked the second consecutive annual outflow for the industry, a feat that hasn't happened since the financial crisis.

"Though December was not as bad as many past Decembers, there is no masking that the month's flows are emblematic of what was one of the more difficult years the industry has faced," eVestment wrote in the report.

The outflows came amid a year where hedge funds largely underperformed the broader market. In 2019, more funds closed than opened for the fifth year in a row as weak returns and high fees pushed investors away. On average, hedge funds gained 9.2% last year, according to Bloomberg . That's significantly below the performance of the S&P 500, which returned 31% in 2019.

Despite investors fleeing hedge funds, total assets under management rose about 4% to $3.3 trillion in 2019 as performance offset some of the redemption pressure, according to eVestment data.

Going forward, there will continue to be assets invested in hedge funds, "but win-rates, the measure of broad enjoyment of new money, have likely peaked," according to the report.

While there were some winners 37% of funds saw inflows in 2019 the industry is increasingly becoming a place where only the best survive and overarching success is a thing of the past, the report showed.

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