TrimTabs Investment Research and BarclayHedge report that the hedge fund industry posted an estimated inflow of USD2.9 billion (0.2% of assets) in January 2011, the sixth straight inflow.
“This inflow is very bullish for the industry because January typically delivers a heavy redemption related to year-end,” said Sol Waksman, founder and President of BarclayHedge. “Additionally, February is historically a strong month for new fund subscriptions, and our preliminary data suggests the industry took in as much as USD10.0 billion last month.”
Hedge fund investors exhibited a weaker appetite for risk in January. All six equity fund strategies redeemed assets, and the emerging markets outflow marked the first since July 2010. Meanwhile, fixed income funds received USD3.5 billion (2.0% of assets), the largest inflow since February 2008.
“Hedge fund managers are also exercising some caution,” explained Vincent Deluard, Executive Vice President of Research at TrimTabs. “Speculative traders are now modest sellers of U.S. equity futures. They exhibited terrific timing by reversing course at about the time the market peaked in February. Also, short interest increased 1.4% last month. Managers appear to be thinning their long books and boosting their hedges, albeit modestly.”
Funds of hedge funds redeemed USD3.6 billion (0.7% of assets) in January, the third straight outflow as well as the heaviest since January 2010. Commodity trading advisors (CTAs) took in USD2.8 billion (1.0% of assets), the tenth inflow in 11 months. Meanwhile, macro funds received USD1.2 billion (1.2% of assets), the seventh straight inflow.
“Macro funds hauled in 11.8% of assets in the past year, easily the heaviest inflow of any strategy, even though they underperformed the industry by 490 basis points,” noted Deluard. “Macro themes—turmoil in the Middle East, currency wars, sovereign debt crises, central bank asset purchases—have been peppering markets, and hedge fund investors are banking on macro managers to navigate
them with skill.”
The TrimTabs/BarclayHedge database tracks hedge fund flows on a monthly basis. The TrimTabs/BarclayHedge Hedge Fund Flow Report provides detailed analysis of these flows as well as relevant topical studies.
