Investors pulled a net $5.9 billion out of U.S. hedge funds in April, marking the industry's biggest outflow in 6-1/2 years as they punished managers for their worst-ever returns at the start of 2008. (Video: Convicted former hedge fund manager Samuel Israel III, disappears in New York State)
According to new data released by TrimTabs Investment Research and BarclayHedge late Monday evening, investors took $9.4 billion away from individual hedge fund managers and added $3.5 billion to funds of hedge funds, portfolios that spread select a group of individual hedge funds.
"April's outflow from hedge funds was not surprising because hedge funds underperformed the S&P 500 in both March and April," said Sol Waksman, chief executive officer of BarclayHedge. "Market volatility and weak inflows into funds of hedge funds suggest hedge fund flows were also depressed in May," he added in a statement.
In March, the $1.8 trillion hedge fund industry, where assets have doubled in the last three years, took in $22 billion.
The researchers found that April's outflow was the first since December 2005 and the largest since October 2001.