Outflows, underperformance, and liquidations: Hedge funds have not enjoyed 2019 Hedge funds got out to a roaring start in 2019, but have slipped since, with the average fund underperforming the overall market. Investors, many of whom put up with net losses in their hedge fund portfolios last year, have been pulling money by the billions. More hedge funds were liquidated than launched in the first quarter of the year, the third quarter in a row that has happened, and this year has lacked the mega-launches that dominated last year's headlines. Click here for BI Prime stories . The $3.2 trillion hedge fund industry is not having a good time. While investors going into the year were optimistic about their hedge fund portfolios , the industry's underperformance — returning 5.3% on average through May compared to the SP returning nearly 10% during the same time — has led to more $25 billion in redemptions, according to data tracker eVestment. These poor returns have coincided with investor demand for lower fees and increased transparency , simultaneously pushing long-time players out of the space while raising the bar for new entrants . "The industry is enduring a consolidation drive primarily by the ability, or inability, of managers to produce returns in-line with investor expectations," a report by eVestment reads.