Outflows from the hedge fund industry slowed substantially in July amid mixed signals on trade and the global economy, according to the Barclay Fund Flow Indicator. Hedge fund industry assets rose to an all-time high of USD3.1 trillion in July.
Data drawn from more than 5,000 hedge funds in the BarclayHedge database estimated that the hedge fund industry (excluding CTAs) gave up USD1.0 billion (-0.03 per cent of assets) in July, slowing nearly nine-fold from redemptions of USD8.9 billion (-0.3 per cent of assets) the month before. The back-to-back outflows underscore uncertainties about trade, corporate earnings and global commodities prices, according to the Barclay Fund Flow Indicator, a monthly big-picture report on the health of the alternative investments industry.
“Corporate earnings and global equities indexes showed impressive strength in July,” says Sol Waksman, founder and president of BarclayHedge. “At the same time, hedge fund investors had to weigh July’s good news against the global implications of trade disputes, a rising dollar and declining commodity prices.”
Waksman noted that despite two months of redemptions, hedge fund industry assets climbed 5.3 per cent year-to-date and 15.3 per cent over the trailing 12 months.
At the sector level, fixed Income hedge funds saw the heaviest inflows in the trailing 12 months ending in July, adding USD24.4 billion (5.0 per cent of assets). Equity Market Neutral funds had the strongest 12-month inflows as a percentage of assets (USD16.4 billion, 21.3 per cent of assets).
At the regional level, hedge funds domiciled in the U.K. and its offshore islands fared the best in July, reeling in USD4.6 billion (0.7 per cent of assets). “U.K.-based funds have been immensely popular in recent months,” says Waksman. These funds added USD29.3 billion (5.0 per cent of assets) year-to-date and USD65.7 billion (12.8 per cent of assets) in the trailing 12 months. “Their U.S.-based counterparts, by contrast, had the largest July redemptions at USD2.4 billion (-0.2 per cent of assets).”
In the managed futures sector, dollar strength and declining oil and metals prices sapped demand for Commodity Trading Adviser (CTA) funds, which redeemed USD2.4 billion (-0.6 per cent of assets) in July, the largest outflows since December 2016.
“Demand for CTAs has been tepid since a powerful rally in the US dollar started in March,” Waksman says.
CTA assets dipped 3.2 per cent to USD357.5 billion in July, a year-to-date low.
