Hedge fund redemptions slowed from their December pace in January, but persisted for a fifth straight month, driven by a fourth-quarter stock market plunge and investor concerns over global trade disputes and a possible global economic slowdown.
January’s hedge fund redemptions stood at USD24.1 billion, a marked decrease from December’s USD42.3 billion but still a drop of 0.8 per cent of hedge fund assets, according to the Barclay Fund Flow Indicator, published by BarclayHedge, a division of Backstop Solutions.
Data from the nearly 6,000 funds included in the BarclayHedge database showed the January activity of hedge fund investors worldwide (excluding CTAs) producing a fifth straight month of net redemptions, even as outflows backed off December’s pace – the largest monthly hedge fund redemptions total in at least five years.
“A fourth quarter U.S. stock market plunge coupled with volatility in fixed-income markets clearly spooked investors,” said Sol Waksman, president of BarclayHedge. “Meanwhile, international stocks fared no better including in emerging markets where concerns over U.S.-China trade issues and fears of further U.S. interest rate hikes fueled volatility.”
For the 12-month period ending Jan. 31, hedge fund net outflows stood at USD118.3 billion, 4.0 per cent of industry assets. At the end of January, global hedge fund industry net assets stood at nearly USD2.96 trillion.
Macro funds led the field in hedge fund inflows over the 12-month period ending in January, adding more than USD14.2 billion, 6.7 per cent of net assets. Event Driven funds added more than USD4.7 billion – 3.2 per cent of assets – over the period, while Equity Market Neutral funds took in nearly USD3.5 billion, adding 3.9 per cent to assets.
On the flip side, Balanced (Stock & Bonds) funds experienced nearly USD28.3 billion in outflows, a decline of 12.8 per cent of assets. “Beginning with an October sell-off, U.S. equity markets experienced their worst quarter in 10 years,” said Waksman. “At the same time, tighter monetary policies and a flattening yield curve throughout the year brought volatility to bond markets, creating a difficult climate for balanced funds.”
China/Hong Kong and Latin America were the only regions posting net hedge fund inflows in January. China and Hong Kong funds posted more than USD86.0 million in January inflows, adding 0.2 per cent to assets. Meanwhile, Latin American hedge funds added 0.5 per cent to assets in January, taking in more than USD52.7 million.
Hedge funds in the U.S. and its offshore islands had a very different experience in January with USD13.2 billion in January outflows – 0.9 per cent of assets. Continental Europe funds saw assets decline 1.9 per cent with USD12.6 billion in redemptions in January, while net assets of U.K. and its offshore island hedge funds declined 1.3 per cent in January with nearly USD7.0 billion in outflows.
Among managed future funds, January was another month marked by net outflows. CTA redemptions picked up in January, to USD1.9 billion from USD90 million in December. For the 12 months ending Jan. 31, CTA funds experienced USD3.3 billion in net outflows, a 0.9 per cent decrease in assets.
