The hedge fund industry returned to net outflows in February with USD8.1 billion in redemptions, a reversal from January’s USD21.2 billion in inflows.February’s redemptions represented 0.2 per cent of industry assets, according to the Barclay Fund Flow Indicator published by BarclayHedge, a division of Backstop Solutions.
A February trading loss of USD57.9 billion brought total hedge fund industry assets to nearly USD3.21 trillion as February ended, down from USD3.26 trillion at the end of January.
February’s redemptions were driven largely by USD8.9 billion in outflows from hedge funds in the UK and its offshore islands and USD1.2 billion from funds in Continental Europe. Data from 7,100 funds (excluding CTAs) in the BarclayHedge database saw hedge funds in the U.S. and its offshore islands having a better experience, posting USD3.4 billion in February inflows.
“Slowing economic activity in the UK and across the Eurozone coupled with a downgraded projection for 2020 growth from the European Central Bank prompted investors to look for opportunities elsewhere in February,” says Sol Waksman, president of BarclayHedge. “The picture was brighter for hedge funds in the U.S. where stocks and corporate bonds enjoyed their best year in a decade in 2019.”
Over the 12-month period through February, the hedge fund industry experienced USD84.5 billion in redemptions. A USD107.2 billion trading profit over the period left industry assets at nearly USD3.21 trillion at the end of the month, up from USD2.96 trillion a year earlier.
A handful of hedge fund sectors bucked the 12-month redemption trend through February. Among them were Event Driven funds with USD30.0 billion in inflows, 21.5 per cent of assets. Sector Specific funds took in USD6.8 billion over the period, 4.0 per cent of assets, while Multi-Strategy funds added USD2.8 billion, 0.9 per cent assets.
Much more common were sectors with 12-month redemptions. Among the largest were Equity Long/Short funds which shed USD38.8 billion over the 12 months, 18.5 per cent of assets, Equity Long Bias funds which saw USD15.5 billion in outflows, 4.7 per cent of assets, Fixed Income funds with USD14.2 billion in redemptions, 2.6 per cent of assets, and Equity Market Neutral funds which experienced USD12.4 million in outflows, 13.5 per cent of assets.
Managed futures funds also experienced net outflows in February with USD1.7 billion in redemptions. A USD6.1 billion trading loss in February left total CTA industry assets at USD307.9 billion as the month ended, down from USD315.7 billion at the end of January.
Redemptions from CTA funds were a worldwide trend in February led by USD1.5 billion in outflows from managed futures funds in the U.S. and its offshore islands, 0.8 per cent of assets. CTAs in Continental Europe experienced USD988.3 million in outflows, 2.8 per cent of assets, while funds in the U.K. and its offshore islands saw USD517.2 million in redemptions, 0.8 per cent of assets.
For the 12-month period through February, CTAs experienced USD15.3 billion in redemptions, 4.3 per cent of industry assets. A USD9.6 billion trading profit over the period brought industry assets to the USD307.9 billion figure as the month ended, down from USD351.1 billion a year earlier.
