April hedge fund redemptions totalled USD38.1bn, says Backstop BarclayHedge

The Covid-19 pandemic’s impact on hedge fund redemptions continued in April as the industry experienced USD38.1 billion in outflows. While a sizeable sum, the net redemption total was less than half of March’s USD85.6 billion redemption total.

April’s redemptions represented 1.3 per cent of industry assets, according to the Barclay Fund Flow Indicator published by BarclayHedge, a division of Backstop Solutions.

A positive note was a USD101.2 billion monthly trading profit fuelled by an April stock market rally, bringing total hedge fund industry assets to more than USD2.99 trillion as April ended, up from USD2.86 trillion at the end of March.

Data from 6,000 funds (excluding CTAs) in the BarclayHedge database showed the greatest volume of April redemptions coming from hedge funds in the US and its offshore islands where investors pulled out USD21.7 billion during the month. Investors redeemed nearly USD13.1 billion from funds in the UK and its offshore islands during the month, while funds in Continental Europe experienced nearly USD2.6 billion in outflows.

“The total amount of hedge fund redemptions may have declined in April, but its significant volume showed that the Covid-19 pandemic’s influence on investor sentiment remains a powerful force,” says Sol Waksman, president of BarclayHedge. “Stock market volatility, troubling economic indicators on all sides and continued high unemployment led many investors to decide that the safest place for now is on the sidelines.”

Over the 12-month period through April the hedge fund industry experienced USD187.9 billion in redemptions. April’s USD101.2 billion trading profit reduced the industry’s 12-month trading loss to USD75.2 billion from USD142.8 billion at the end of March, leaving total industry assets at USD2.99 trillion at the end of April, up from USD2.86 trillion at the end of March but down from nearly USD3.10 trillion a year earlier.

Four hedge fund sectors posted 12-month inflows through April. Event driven funds added USD23.0 billion, 15.9 per cent of assets, Sector Specific funds brought in USD7.5 billion, 4.3 per cent of assets, Convertible Arbitrage funds experienced USD2.5 billion in inflows, 12.8 per cent of assets, and Emerging Markets – Latin America funds added USD1.6 billion, 13.8 per cent of assets.

Among sectors booking 12-month redemptions, most notable were Fixed Income funds with USD47.8 billion in redemptions, 7.6 per cent of assets, Equity Long/Short funds with USD42.0 billion in outflows, 20.1 per cent of assets, and Equity Long Bias funds which shed USD20.6 billion, 6.2 per cent of assets.

The managed futures industry fared better than hedge funds in April, with the industry experiencing USD1.5 billion in inflows, a considerable improvement on March’s USD19.0 billion in redemptions. A USD2.1 billion trading profit in April helped bring industry assets to USD280.8 billion as the month ended, up from USD278.0 billion at the end of March.
CTAs in the U.K. and its offshore islands drove the industry inflow trend in April adding USD2.7 billion during the month, 4.4 per cent of assets. Funds in China and Hong Kong also experienced inflows taking in USD25.0 million, 3.2 per cent of assets. Regions experiencing net redemptions were led by CTA funds in the U.S. and its offshore islands which saw USD833.4 million in outflows in April, 0.5 per cent of assets.
Over the 12-month period through April, CTAs experienced USD30.4 billion in redemptions, 9.2 per cent of assets. An USD8.3 billion trading loss over the period contributed to the industry’s USD280.8 billion in assets at the end of April, a drop from USD330.9 billion a year earlier.