Hedge-fund assets dropped below $4 trillion last month because of poor performance and investor withdrawals, according to new Hedge Fund Research data. Institutional investors pulled out roughly $27.5 billion from hedge funds during the second quarter, the highest quarterly outflow since the first quarter of 2020. High inflation and a looming economic recession are to blame for the drop in flows, HFR said. The S&P 500 finished the initial six months of 2022 with a 20.6% loss, the worst midyear performance in 50 years.