Hedge fund assets likely fell an additional 5.8% in January to $1.75 trillion, according to early estimates from HedgeFund.net.

The drop was largely due to net investor redemptions and fund liquidations of $124.7 billion during the month, it said. January was the fifth month in a row in which hedge fund assets fell due to redemptions and liquidations, although the firm noted that the January outflow represents a slowing of redemptions from November and December.

Of the funds experiencing redemptions in January, larger funds had higher percent of assets redeemed than smaller funds. HFN estimates the average redemption in January for funds with greater than $500 million in assets under management at the end of December was 13.5% compared to 10.9% for funds with less than $20 million in AUM. Additionally, HFN estimates that 57% of large funds experienced redemptions in January while 45% of small fund investors withdrew assets.

So far, hedge fund performance appears to be about flat for the month. Performance from convertible arbitrage strategies led the way in January, it said, as convertible funds appeared to benefit from dislocations in the convertible bond market. “The imposition of gates and suspended withdrawals significantly slowed the redemption induced selling by convertible arbitrage managers which persisted in prior months. As a result, lack of selling pressure did more to aid January performance than overly strong buying,” it noted.

IE