The hedge fund industry suffered outflows for the second quarter in a row – the first time this has happened since 2009, data reveals.

Volatile financial markets drove global hedge fund capital down slightly from $2.896 trillion to $2.86 trillion in the first quarter of 2016, as investor outflows totaled $15.1 billion, according to Hedge Fund Research. This was the highest level of outflows since the second quarter of 2009.

The HFRI Fund Weighted Composite Index dipped by 0.67 per cent over the three-month period. Capital outflows were concentrated in the industry’s largest managers, as firms with over $5 billion assets under management, which collectively manage 68.3 per cent of all industry capital, saw net outflows of $10.7 billion, including manager returns of investor capital and family office conversions. In contrast, firms managing less than $250 million saw net inflows of $730 million.

Investors withdrew $8.3 billion from event-driven strategies, reducing total capital to $729 billion. Over half of these outflows were from activist strategies ($4.3 billion), while merger arbitrage funds generated net inflows of over $400 million.

Equity hedge funds, meanwhile, experienced outflows of $4.7 billion over the quarter, bringing total assets in this space to $806.5 billion, the largest strategy area of industry capital.

Despite performance gains of quantitative macro and trend-following commodity trading advisors strategies, hedge fund capital in macro strategies overall fell to $548 billion amid net investor outflows of $7.3 billion.

Discretionary thematic funds suffered the largest asset outflow of macro sub-strategies.

“The hedge fund industry began 2016 with a fractional decline as widely-anticipated asset outflows associated with manager-initiated return of investor capital and private family office conversions were only partially offset by new investor allocations in [the first quarter],” said Kenneth Heinz, president of HFR.

“The volatile performance environment continues to be dominated by intense dislocations, sharp reversals and rapidly shifting correlations across assets, with the recent realized volatility resulting in an improved opportunity set and wider arbitrage deal spreads. These are likely to contribute to performance gains as investor capital is re-allocated into funds and strategies positioned for this environment through mid-year.”