March trading profits and inflows propel hedge fund AUM to record USD4.07tn

Hedge funds saw USD19.1 billion in new assets flow into the industry in March. Coupled with a USD28.5 billion monthly trading profit, total hedge fund industry assets rose to more than USD4.07 trillion as March ended, a new record high, according to data released by BarclayHedge.

Most hedge fund sectors experienced net inflows in March. Fixed Income funds set the pace adding USD6.9 billion to assets, while Sector Specific funds brought in USD5.8 billion, Emerging Markets – Asia funds saw USD5.6 billion in inflows, Event Driven funds took in USD3.0 billion and Multi-Strategy funds added USD2.9 billion.

Notable among sectors shedding assets during the month were Emerging Markets Global funds with USD3.8 billion in redemptions, Equity Long Bias funds with USD3.3 billion in outflows and Macro Funds with USD1.7 billion in redemptions.

“Easing of lockdown restrictions, optimistic economic forecasts, rising equity and commodity prices and President Biden’s USD1.9 trillion pandemic recovery plan buoyed investors’ optimism,” said Sol Waksman, president of BarclayHedge. “The last time that hedge funds had a losing month was October 2020 when the Barclay Hedge Fund Index declined -0.11 per cent.”

Over the 12-month period through March, the hedge fund industry experienced USD41.9 billion in inflows. A USD552.1 billion trading profit over the period contributed to the total industry assets of USD4.07 trillion at the end of the month, up from USD4.03 trillion at the end of February and up from USD2.86 trillion a year earlier.

Ten hedge fund sectors experienced 12-month inflows through March led by Sector Specific funds with USD54.9 billion in inflows, 32.7 per cent of assets. Others posting inflows over the period included Fixed Income funds adding USD45.5 billion, 7.6 per cent of assets, Emerging Markets – Asia funds bringing in USD30.6 billion, 30.4 per cent of assets, Event Driven funds with USD17.6 billion in inflows, 10.7 per cent of assets, and Convertible Arbitrage funds adding USD7.1 billion, 32.3 per cent of assets.

Sectors with the largest 12-month redemptions included Balanced (Stocks & Bonds) funds with USD44.1 billion in outflows, 12.5 per cent of assets, Macro funds shedding USD19.4 billion, 11.0 per cent or assets, Equity Long Bias funds with USD19.2 billion in redemptions, 6.4 per cent of assets, Equity Long/Short funds with USD14.9 billion in outflows, 8.4 per cent of assets, and Equity Market Neutral funds with USD9.7 billion in redemptions, 13.1 per cent of assets.

The managed futures industry extended its inflow streak to five consecutive months bringing in USD1.7 billion in new assets in March. Three of four CTA sectors experienced net inflows in March, led by Systematic CTAs which brought in USD1.3 billion, 0.5 per cent of assets. Hybrid CTAs added USD447.8 million, 2.8 per cent of assets, and Multi Advisor Futures Funds experienced USD131.2 million in inflows, 1.2 per cent of assets.

Discretionary CTAs stood alone in experiencing net redemptions in March shedding USD95.7 million, 0.6 per cent of assets.

For the 12-month period, the managed futures industry experienced USD21.3 billion in inflows. A USD16.1 billion trading profit over the period contributed to the USD319.0 billion in total industry assets, up from USD278.0 billion a year earlier.