Hedge funds had their biggest outflow of 2013 in December, redeeming USD10.4bn or 0.5 per cent of assets, according to the latest TrimTabs/BarclayHedge Hedge Fund Flow Report.
“The hedge fund industry took in a three-year high of USD56.5bn in 2013, a strong turnaround from 2012, when the industry shed USD28.9bn,” said Sol Waksman, president and founder of BarclayHedge.
“Industry assets climbed to a five-year high of USD2.2trn in December from USD2.1trn in November, according to estimates based on data from 3,372 funds. Assets rose 19.9 per cent last year but were down 11.6 per cent from the all-time high of USD2.4trn in June 2008.”
The hedge fund industry gained 1.1 per cent in December, underperforming the S&P 500, which gained 2.5 per cent. For the year, the industry returned 11.3 per cent, while the S&P 500 gained 32.4 per cent.
Funds of hedge funds redeemed USD6.8bn (1.4 per cent of assets) in December, reversing November’s inflow of USD1.9bn.
“Redemptions from funds of funds slowed to USD35.3bn last year from USD42.9bn in 2012,” says Waksman.
The report finds bearishness on the S&P 500 over the next 30 days is at a five-month high, while bullishness is at a five-month low. Half of respondents expect equities to outperform bonds and precious metals over the next six months, a notable downturn in the past month. Sentiment on developed markets hit an all-time high, while the outlook for emerging markets sank to a record low.