Hedge fund investors redeemed a net USD14.2bn in 2012, reversing a USD50.7bn inflow to the industry in 2011, according to a report from TrimTabs and BarclayHedge based on data from 3,492 funds.
Hedge fund redemptions hit a 44-month high of USD20.7bn in December, according to the latest monthly TrimTabs/BarclayHedge Hedge Fund Flow Report, which noted that the industry earned 8.5 per cent in 2012, far below the S&P 500’s 13.4 per cent increase for the year.
“Underperformance versus the S&P 500 Index is a likely culprit in last year’s outflows,” says Sol Waksman, founder and president of BarclayHedge. “We found that from 2010 through 2012, hedge funds gained 14.1 per cent while the S&P 500 Index rose 27.9 per cent. That’s a major shift from the trend over the past five years, when hedge funds gained 10.7 per cent while the S&P 500 was essentially flat.”
Despite lagging performance over the past three years, hedge funds outperformed the S&P 500 Index in the last three months of 2012, gaining 2.46 per cent while the S&P 500 fell 1.0 per cent. Hedge fund investors enjoyed a net 1.7 per cent gain in December, besting a 0.7 per cent rise in the S&P 500 Index for the month.
The Hedge Fund Flow Report also noted that stock-picking hedge fund managers had a good 2012 and a great December.
“Managers of equity long only hedge funds found their groove in December, earning an impressive 4.8 per cent and besting the S&P 500 by 406 bps,” Waksman says.
Equity long-only funds earned 15.5 per cent in 2012, the best performers among the 13 hedge funds categories tracked by BarclayHedge and TrimTabs. Fixed income hedge funds boasted the strongest 2012 inflows at USD36.6bn.
The January 2013 TrimTabs/BarclayHedge Survey of Hedge Fund Managers found widespread optimism about the US economy and the short-term prospects for stocks in 2013. The survey found that bullishness on the S&P 500 surged to a 12-month high in January and that more than two-thirds of the survey’s 121 respondents see less than a 50/50 chance of a sharp correction in the S&P 500 in the first half of 2013.