Hedge funds reverse course in October with USD5.2bn in inflows

Flows

The hedge fund industry returned to positive monthly inflows in October, bringing in USD5.2 billion in new assets for the month, having seen USD2.8 billion in redemptions in September.

October’s inflows represented 0.2 per cent of industry assets, according to the Barclay Fund Flow Indicator published by BarclayHedge, a division of Backstop Solutions.

Coupled with an USD11.9 billion monthly trading loss, total industry assets stood at nearly USD3.41 trillion as October ended, up from USD3.38 trillion at the end of September.

Data from 6,900 funds (excluding CTAs) in the BarclayHedge database showed Fixed Income funds leading the way among sectors that added to assets during the month, bringing in USD3.8 billion. Sector Specific funds posted USD3.5 billion in inflows.

“A number of factors began to bring investors back to hedge funds in October,” says Sol Waksman, president of BarclayHedge. “The end of the shortest bear market on record, improved manufacturing data and better than expected US durable goods orders aroused investor interest.”

For the 12 months through October, the hedge fund industry experienced USD118.8 billion in redemptions. A USD33.9 billion trading profit during the period contributed to the total industry assets of USD3.41 trillion as October ended, up from USD3.13 trillion a year earlier.

Five hedge fund sectors posted 12-month inflows through October, led by Sector Specific funds with USD25.8 billion in 12-month inflows, 15.1 per cent of assets. Event Driven funds brought in USD10.1 billion, 6.0 per cent of assets, Convertible Arbitrage funds experienced USD3.7 billion in inflows, 17.7 per cent of assets, while Emerging Markets – Asia funds took in USD2.9 billion, 2.6 per cent of assets, and Emerging Markets – Latin America funds added USD494.9 million, 4.1 per cent of assets.

Fixed Income funds experienced the largest 12-month redemptions at USD30.5 billion, 4.7 per cent of assets, followed by Equity Long/Short funds shedding USD29.5 billion, 14.5 per cent or assets, Macro Funds with USD21.0 billion in outflows, 10.8 per cent of assets, and Equity Long Bias funds with USD19.3 billion in redemptions, 5.6 per cent of assets.

Managed futures funds reversed course on what had been a three-month inflow trend in October, experiencing USD2.7 billion in redemptions, 0.9 per cent of assets. Two of four CTA sectors tracked did add to assets in October with Discretionary CTAs bringing in USD956.5 million, 8.2 per cent of assets, while Multi-Advisor Futures Funds added USD5.0 million, a negligible percentage of assets. A USD521.4 million trading loss for the month brought total CTA industry assets to USD298.2 billion as October ended, down from USD303.6 billion at the end of September.

For the 12 months through October, managed futures funds experienced USD8.9 billion in outflows, 2.9 per cent of assets. A USD13.2 billion trading loss over the period contributed to the USD298.2 billion industry asset total at the end of the month, down from USD305.4 billion a year earlier.

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