Hedge funds enjoyed their strongest demand in nine months in August as investors brushed off a global equities sell-off, according to the Barclay Fund Flow Indicator.
Data drawn from more than 5,000 hedge funds in the BarclayHedge database estimated that the hedge fund industry (excluding CTAs) hauled in USD21.5 billion (0.7 per cent of assets) in August, reversing redemptions of USD1.0 billion (-0.03 per cent of assets) in July.
Industry assets rose to an all-time high of USD3.07 trillion for the month. Investors bought hedge funds in August despite declines in global equities markets and continuing trade disputes, according to the Barclay Fund Flow Indicator, a monthly big-picture report on the health of the alternative investments industry.
“Heavy buying of hedge funds in August accompanied encouraging fundamentals in the US, where economic growth kept marching upward,” says Sol Waksman, founder and president of BarclayHedge. “The picture was less positive worldwide, however, as equity indexes sold off in Europe, Asia and the Emerging Markets in August amid trade anxieties and worrisome developments in Turkey’s currency and Italy’s government debt.”
Waksman noted that strong August inflows marked a significant departure from the first seven months of 2018, when hedge fund inflows averaged USD2.9 billion (0.1 per cent of assets).
At the sector level, fixed-income hedge funds saw the biggest inflows in the trailing 12-months ending in August, adding USD38.3 billion (7.8 per cent of assets). Equity Market Neutral funds attracted the strongest 12-month inflows as a percentage of assets (USD15.9 billion, 20.2 per cent of assets).
At the regional level, hedge funds based in the US, the UK, and their respective offshore islands saw the strongest inflows in August. Investors ploughed USD28.8 billion (1.8 per cent of assets) into US funds and USD3.8 billion (0.6 per cent of assets) into UK funds.
“Otherwise, regional hedge fund demand reflected the global equities selloff in August,” Waksman said. Continental Europe funds had the biggest August outflows at USD3.2 billion (-0.4 per cent of assets), while China/Hong Kong funds shed USD290 million (-0.5 per cent of assets) and Latin America funds redeemed USD270 million (-1.7 per cent of assets).”
In the managed futures sector, outflows from Commodity Trading Advisor (CTA) funds fell to USD150 million (0.04 per cent of assets) in August, improving on July’s losses, which hit a 19-month high of USD2.4 billion (-0.6 per cent of assets).
“CTA redemptions slowed substantially in August as oil prices rebounded and the US dollar rally levelled off,” says Waksman. CTA assets dipped 0.4 per cent to USD356.0 billion in August, a fresh year-to-date low.”
