The hedge fund redemption trend stretched to three straight months in August as the industry experienced USD11.3 billion in outflows, according to the Barclay Fund Flow Indicator published by BarclayHedge.
August’s redemptions represented 0.4 per cent of industry assets and were an increase from July’s USD8.1 billion in industry outflows,
Coupled with monthly trading losses of USD10.3 billion, hedge fund industry assets stood at more than USD3.08 trillion as August ended, down from USD3.12 trillion at the end of July.
The industry’s August redemption total resulted largely from outflows from hedge funds in the UK and Europe where redemptions reflected investors’ concerns over the ultimate shape of the UK’s exit from the European Union and troubling economic news from the Eurozone. Strong US stock market performance early in the summer and positive economic news contributed to significant inflows to US funds in August, but it wasn’t enough to tip the industry wide balance.
Data from the nearly 6,000 funds (excluding CTAs) included in the BarclayHedge database showed hedge funds in the UK and its offshore islands experiencing USD14.4 billion in redemptions in August, 2.7 per cent of assets. Meanwhile, the month’s outflows from funds in Continental Europe totalled USD11.8 billion, 1.6 per cent of assets.
The experience was different for US hedge funds which brought in nearly USD6.0 billion, 0.4 per cent of assets, in August.
“Hedge funds in the U.K. and Europe continue to tip the industry balance to redemptions as investors fret over indicators suggesting a slowdown in European economies while a no deal Brexit remains a possible outcome of the U.K.’s Brexit conundrum,” says Sol Waksman (pictured), president of BarclayHedge. “That said, U.S. funds had a positive experience in August with investors buoyed by early summer equity rallies and the Fed’s July rate cut.”
For the 12-month period through August, the hedge fund industry experienced USD194.1 billion in redemptions, 6.3 per cent of industry assets.
While most hedge fund sectors reported outflows for the 12-month period, a handful experienced net inflows for the period. Event Driven funds took in nearly USD17.0 billion over the 12 months, 11.6 per cent of assets, while Macro funds added USD14.3 billion, 6.9 per cent of assets, and Convertible Arbitrage funds took in more than USD508 million, 2.6 per cent of assets.
Equity and bond market volatility continued to be reflected in those sectors with the greatest 12-month redemption volume. Fixed Income funds experienced USD52.9 billion in redemptions over the period, 8.9 per cent of assets, Equity Long/Short funds saw USD38.0 billion in outflows, 17.4 per cent of assets, Equity Long Bias funds shed USD28.3 billion, 8.2 per cent of assets, and Balanced (Stocks & Bonds) funds saw USD24.8 billion in redemptions over the 12 months, 10.1 per cent of assets.
Managed futures funds saw their redemption trend extend to 14 straight months in August. For the month, CTAs experienced USD5.0 billion in net redemptions, 1.5 per cent of industry assets. Redemptions from funds in the U.S. and its offshore islands contributed the bulk of the month’s redemptions as U.S. CTAs shed nearly USD4.1 billion, 2.0 per cent of assets.
For the 12 months through August, managed futures funds experienced USD25.4 billion in redemptions, 7.1 per cent of assets. A USD900 million monthly trading loss left industry assets at USD304.3 billion as August closed, down from USD327.3 billion at the end of July.
