BlackRock is reportedly shutting a macro hedge fund in what has been a generally difficult year for the industry.

US-listed investment titan BlackRock is closing down a macro hedge fund after client outflows and poor performance by the $1 billion vehicle, adding to data suggesting the hedge fund industry is achieving only lackluster returns at best.

The investment firm, which oversaw a total of $4.2 trillion of client money as at the end of September, is returning money to clients in its Global Ascent fund.

“We believe that redeeming the Global Ascent Fund was the right thing to do for our clients, given the headwinds that macro funds have faced. We are committed to our macro investment capabilities. Many of our multi-asset and single-asset class strategies combine top-down (macro) techniques with bottom-up (security level) capabilities and we believe macro factors can be important contributors to successful performance," BlackRock told this publication in an emailed statement today.
 
“Reflecting our fiduciary ethos, BlackRock regularly reviews its product set to ensure alignment with client interests.  Over the past several years, we have closed, on average, over 200 funds a year,” the firm said.
 
Hedge funds have had a difficult year so far. According to Preqin, the tracker of alternative asset classes, its All Strategies Hedge Fund benchmark has risen 2.45 per cent for the year so far and its Macro Strategies indices shows YTD returns of 2.5 per cent. Chicago-headquartered Hedge Fund Research reported that estimated hedge fund capital declined by $95 billion across all strategy areas to end the third quarter at $2.87 trillion, as new investor capital inflows only partially offset performance-based declines. 

The Financial Times noted in a report that BlackRock’s move comes a month after Fortress Investment Group announced the closure of its $2 billion flagship macro fund.

The Global Ascent fund is reportedly down about 9.4 per cent this year, which is its worst performance since it was launched in 2003, the FT said.

Weak or low performance during a difficult year for many equity markets will reignite debate on whether the hedge fund sector can justify the fees that typically are higher than on conventional actively managed portfolios.