Third quarter end saw hedge fund investors retreat, but industry assets still up, says BarclayHedge

Abrupt end

Three months of hedge fund inflows came to an abrupt halt at the end of the third quarter, as investors withdrew USD2.8 billion in September amid a surge in coronavirus cases and fears of renewed economic disruption, new data from BarclayHedge shows.

Despite September’s outflows – which represent 0.1 per cent of industry assets – as well as a trading loss of USD15.6 billion, global hedge fund assets grew to USD3.38 trillion at the end of September, up from USD3.36 trillion the previous month.

BarclayHedge’s data analysis of some 6,900 funds showed sector-specific hedge funds led the way, drawing USD2.3 billion in September, while emerging markets (global) strategies added USD1.6 billion.

Managed futures strategies posted a third consecutive month of industry inflows in the final month of Q3, attracting USD1.0 billion in new assets.  Within the managed futures bracket, systematic CTAs brought in USD918 million while discretionary CTAs drew USD124.7 million. But the sector overall suffered a USD3 billion trading loss for the month, taking total managed futures assets to USD303.6 billion for September, down from USD304.9 billion in August.

Over the 12-month period to the end of September, the hedge fund industry altogether saw USD122.2 billion in redemptions. A USD60.4 billion trading profit over the period contributed to the total industry assets of more than USD3.38 trillion at the end of September 2020, up from USD3.05 trillion in September 2019.

“Covid-19 case numbers spiked in many regions and countries over the summer, while week after week brought reports of more than a million US workers filing first-time unemployment claims,” said BarclayHedge president Sol Waksman.

“Couple that with a Fed warning that the surging pandemic was beginning to hurt economic recovery and other indicators like a downward revision in oil demand forecasts and many hedge fund investors decided to look elsewhere in September.”