Hedge Funds

Churn rate drops, but fund of funds suffer net outflows


An analysis by Morgan Stanley shows the strategic reallocations of capital by investors among their existing deployments decreased to $3 billion in the third quarter after reaching a recent high of $8.9 in the second quarter just as funds of funds suffered net outflows for the first time in three years.

This churn rate hit $8.9 billion in the second quarter as funds of funds scrambled to eke alpha out of existing investments. Their fear of underperformance was apparently justified, as $1.2 billion left funds of funds, which had pulled in a combined $12.9 billion in the first two