Hedge funds were unable to build on the previous month’s inflows in June with the industry moving back into net redemption territory with USD12.2 billion in outflows for the month.
June redemptions, which represented 0.4 per cent of industry assets, were a reversal from May’s USD800 million in hedge fund industry inflows, according to the Barclay Fund Flow Indicator published by BarclayHedge, a division of Backstop Solutions.
The ongoing US-China trade war which began to manifest itself in signs of slowing industrial and consumer demand in the US and China, falling oil prices and an equity market plunge this spring factored heavily in June’s redemption activity.
Data from the nearly 6,000 funds (excluding CTAs) included in the BarclayHedge database showed June’s worldwide redemption trend driven largely by three regions. In the US investors pulled USD6.2 billion, 0.4 per cent of assets, from hedge funds in June. In Europe and the UK, Brexit uncertainties added an additional drag, with hedge funds in Continental Europe seeing monthly outflows of USD2.7 billion, 0.4 per cent of assets, while in the UK and its offshore islands hedge funds experienced USD1.5 billion in redemptions, 0.3 per cent of assets.
“Uncertainty over the economic consequences of the ongoing US-China tariff battle led skittish investors to pull back in June,” says Sol Waksman, president of BarclayHedge. “In Europe, while several economies in Eastern Europe continue to exceed expectations, it wasn’t enough to overcome Brexit’s impact on the UK and Germany.”
For the 12 months ending 30 June, the hedge fund industry experienced USD154.2 billion in redemptions, 5.1 per cent of industry assets.
Most hedge fund sectors continued to post net redemptions for the 12-month period ending June 30, though a few sectors bucked the trend. Macro funds realised USD16.3 billion in inflows for the 12 months, 8.0 per cent of assets, while Event Driven funds experienced USD10.6 billion in inflows, 7.3 per cent of assets, and Emerging Markets – Asia funds took in USD1.0 billion, 0.9 per cent of assets. Merger Arbitrage funds experienced USD600 million in inflows over the 12 months, 1.0 per cent of assets.
Bond and equity market volatility continued to be reflected in the 12-month flow experience of several sectors, including Equity Long Bias funds with USD33.8 billion in outflows, 10.1 per cent of assets, Balanced (Stocks & Bonds) funds with USD29.8 billion in redemptions, 12.2 per cent of assets, Equity Long/Short funds with USD29.2 billion in 12-month outflows, 13.6 per cent of assets, and Fixed Income funds with USD24.6 billion in outflows over the period, 4.3 per cent of assets.
Managed futures funds’ monthly redemption trend extended to 12 straight months in June with USD2.1 billion in outflows for the month representing 0.7 per cent of industry assets. While the CTA redemption trend slowed in some regions in June – and some even experienced net inflows – the month’s global net outflows largely resulted from USD2.4 billion in redemptions from funds in the U.K. and its offshore islands where investors’ worries of a no-deal Brexit continue to mount.
For the 12-months ending 30 June, managed futures experienced USD20.2 billion in redemptions, 5.5 per cent of assets.