Hedge fund redemptions slowed in October after spiking to a five-year high the month before, according to the Barclay Fund Flow Indicator, published by BarclayHedge.
Data from more than 5,000 hedge funds in the BarclayHedge database revealed that the hedge fund industry (excluding CTAs) redeemed an estimated USD20.7 billion (-0.7 per cent of assets) in October, a month after outflows surged to a five-year high of USD39.1 billion (-1.3 per cent of assets).
Industry assets sank to an eight-month low of USD2.97 trillion. Hedge fund investors’ scepticism waned in October even as the market climate darkened around the globe, according to the Barclay Fund Flow Indicator, a monthly big-picture report on the health of the alternative investments industry.
“The prospects of rising interest rates, a strengthening dollar and persistent trade turmoil undoubtedly kept investors on edge in October,” says Sol Waksman, founder and president of BarclayHedge.
“Year-to-date hedge fund flows sank into negative territory in October with redemptions of USD17.9 billion (-0.6 per cent of assets),” Waksman says. “By contrast, the industry raked in USD89.6 billion (3.2 per cent of assets) in the first 10 months of 2017.”
At the sector level, Sector Specific funds had the biggest 12-month inflows at USD14.3 billion (10.3 per cent of assets). Macro funds had the largest 12-month redemptions at USD12.0 billion (-5.4 per cent of assets).
At the regional level, hedge funds based in the US and Canada added cash in October, while European, Latin American, Chinese and Japanese funds endured notable outflows. Investors added USD2.7 billion (0.2 per cent of assets) to US funds but pulled USD9.4 billion (-1.6 per cent of assets) out of funds based in the U.K.
Hedge funds based in Latin America gave up more than a third of their assets in 12 months amid economic and political turmoil in Venezuela, Brazil, Mexico and beyond. “Investors yanked USD7.9 billion (-35.8 per cent of assets) from these funds between October 2017 and October 2018,” Waksman said.
In the managed futures sector, Commodity Trading Advisor (CTA) funds saw outflows surge nearly eleven-fold to USD3.2 billion (-0.9 per cent of assets) in October, a 22-month high and up from USD300 million (-0.8 per cent of assets) the month before.
