NEW YORK (TheStreet) -- Hedge funds are getting hammered in 2016. Investors have pulled roughly $28 billion dollars from the scantly-regulated funds in the past three months, the worst quarter of outflows since the financial crisis, the New York Times reports.
Columbia Graduate School of Business professor Fabio Savoldelli told BloombergTV Friday that the decline in assets under management has fund employees bailing out of the industry entirely.
"It's really related to the leverage that's related to working at a hedge fund," he said on "Bloomberg Daybreak." "When you're seeing people leaving, you're seeing more of them actually leave for the dark side, i.e. mutual funds."
Hedge fund employees are attracted to mutual funds because of their compensation structure that is less performance-based, Savoldelli explained.
"It's not an eat-what-you kill [scenario]," he said of mutual fund compensation packages, which have higher base salaries and lower bonuses.
High profile hedge funds like Bridgewater Associates have been laying off employees, but Savoldelli does not believe that the industry is facing an existential crisis.
"Hedge funds are absolutely fine," he said.
