Hedge fund investors turned cautious in April 2018, according to the Barclay Fund Flow Indicator, even as the equities markets rebounded and volatility began to calm down. Industry assets levelled off at an all-time high of USD3.0 trillion.
Data drawn from more than 5,000 hedge funds in the BarclayHedge database estimated that the hedge fund industry (excluding CTAs) redeemed USD1.9 billion (0.1 per cent of assets) in April, the first net outflow of 2018 and a turnabout from inflows of USD6.1 billion (0.2 per cent of assets) in March. Industry assets climbed 3.3 per cent year-to-date and surged 22.5 per cent over the trailing 12 months, according to the Barclay Fund Flow Indicator, a monthly big-picture report on the health of the alternative investments industry.
“Though hedge fund investors seemed a bit skittish in April, the industry has fared well over a longer time frame,” says Sol Waksman (pictured), founder and president of BarclayHedge. “Hedge funds took in USD26.3 billion (0.9 per cent of assets) year-to-date and USD108.2 billion (4.3 per cent of assets) in the trailing 12 months.”
Fixed Income hedge funds enjoyed the heaviest inflows in the trailing 12 months ending in April, adding USD31.9 billion (6.8 per cent of assets), the Barclay report estimated. Macro funds suffered the heaviest outflows in the same time span, redeeming USD15.6 billion (-7.1 per cent of assets).
At the regional level, hedge funds focusing on the UK had the highest April inflows at USD3.3 billion (0.5 per cent of assets). US-focused funds saw the heaviest outflows, redeeming USD1.3 billion (-0.1 per cent of assets).
“Funds focusing on the US had the most redemptions for the second month in a row despite healthy corporate earnings in April and solid economic fundamentals,” Waksman said. “Investors seem to be seeing UK funds as a haven from anxieties about trade and tariffs.”
In the managed futures sector, commodity trading adviser (CTA) funds endured a second month of outflows in April even as oil prices hit a 41-month high. Redemptions from CTAs jumped more than fourfold to USD1.3 billion (-0.4 per cent of assets) by month’s end, according to the Fund Flow Indicator. Industry assets totalled USD367.1 billion in April, down slightly from the month before.
“Despite a rough couple of months for CTA funds, the rising tide in worldwide commodity prices is lifting boats across the managed futures sector,” Waksman says. “CTA assets have swelled 11.8 per cent from their interim low of USD328.2 billion in October 2014.”