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December Trading Profits Help Hedge Funds Drive Industry Assets to $4.80 Trillion as 2021 Wraps

Managed Futures Industry AUM Powered Up in 2021 Despite Contraction of Systematic Sector; December Redemptions from Systematic CTAs Swamp Growth from All Other Sectors


The hedge fund industry experienced net outflows in December with $20.4 billion in redemptions, equivalent to a -0.44% reduction in industry assets, according to the Barclay Fund Flow Indicator published by BarclayHedge, a division of Backstop Solutions.

Nevertheless, a $39.8 billion trading profit in December brought total industry assets to nearly $4.80 trillion as the month ended. A steady string of nine consecutive months of inflows, together with strong trading profits, increased hedge fund assets in 2021 by almost 23%.

“It is not at all unusual to see net outflows kick up in December as investors realize profits, harvest losses and rebalance their portfolios before the close of the calendar year. The previous five years all saw net outflows in December, and, in percentage terms, the outflows in 2021 were unexceptional,” reflected Ben Crawford, Head of Research at BarclayHedge. “Investor interest in hedge funds has been so robust and consistent throughout 2021 that even this modest end-of-year outflow serves only to accentuate the trend by contrast: Even after a $20 billion outflow in December, aggregate industry inflows exceeded outflows by more than $200 billion.”

Redemptions were the norm across most hedge fund subsectors in December. Among the subsectors that did see monthly inflows, Equity Long-Only funds added $6.3 billion, 2.1% of assets, Balanced (Stocks & Bonds) funds took in $1.4 billion (+0.2% of assets), Equity Long/Short funds saw $1.3 billion in inflows, (+0.8% of assets), Convertible Arbitrage funds brought in $866.2 million, (+2.5% of assets), and Emerging Markets – Asia funds added $190.7 million, (+0.1% of assets).

Subsectors on the redemption side of the ledger in December included Multi-Strategy funds with -$22.3 billion in outflows, (-4.5% of assets), Event Driven funds which saw -$2.6 billion exit, (-0.9% of assets), Emerging Markets – Global funds experienced -$2.2 billion in outflows, (nearly -1.0% of assets), Macro funds with -$1.8 billion in redemptions,(- 0.9% of assets), and Fixed Income funds which saw -$1.7 billion in outflows, (-0.2% of assets).

The managed futures industry posted a second consecutive month of redemptions in December with -$1.7 billion in outflows. Three of four CTA subsectors tracked did see inflows for the month, however. Hybrid CTAs brought in $368.2 million, (+1.8% of assets), Discretionary CTAs added $108.3 million, (+0.6% of assets), and Multi Advisor Futures Funds took in $47.3 million, (+0.4% of assets).

Nevertheless, December’s asset gains in these three subsectors were swamped by redemptions from Systematic CTAs the world-over. The Systematic subsector saw -$2.2 billion exit during the month, equivalent to shrinkage of -0.7% of sector assets.

2021 Calendar Year Results

For the year, the hedge fund industry experienced $200.7 billion in net inflows in 2021. A $215.0 billion trading profit over the 12-month period brought total hedge fund industry assets to the $4.80 trillion mark, up from $4.69 trillion at the end of November and $3.91 trillion a year earlier.

Almost two-thirds of the hedge fund subsectors tracked had net inflows over the calendar year 2021. In dollar terms, the Fixed Income subsector was by far the largest contributor with $71.7 billion in inflows. Jockeying for second and third place on the podium were Sector-Specific funds and Multi-Strategy funds, swelling $45.4 billion and $42.3 billion respectively.

In percentage terms, the picture was a bit different. Convertible Arbitrage funds had the largest proportional growth, expanding AUM by 21.25% in 2021. Merger Arbitrage and Sector Specific funds also enjoyed robust AUM growth of 16.14% and 15.83% respectively. Multi-Strategy funds grew 11.91% and both Emerging Markets-Asia and Option Strategies funds ended 2021 with more than 10% additional investor capital than they started the year with.

Hedge fund subsectors with the largest 12-month redemptions through December included Balanced (Stocks & Bonds) funds with -$15.6 billion in outflows (-2.8% of assets), Macro funds shedding -$12.8 billion, (-6.7% of assets), Equity Long-Bias funds experiencing -$8.8 billion in redemptions, (-2.5% of assets), Emerging Markets – Global funds with -$6.5 billion in outflows (-5.3% of assets), and Equity Market Neutral funds with -$3.8 billion in redemptions, (- 6.6% of assets).

The CTA industry added more than $4.6 billion in new assets in 2021. A $23.0 billion trading profit over the period brought total industry assets to $346.6 billion at year end, up from $302.7 billion a year earlier.

Three of four subsectors posted robust 12-month inflows over the course of 2021. Discretionary CTAs brought in $3.0 billion (+23.8% of assets), Hybrid CTAs scooped up $1.8 billion in inflows, (+19.2% of assets), and Multi Advisor Futures funds added $1.1 billion, (+10.3% of assets). The lone managed futures subsector recording net redemptions in 2021 was Systematic CTAs with -$214.2 million in outflows, a drop of about -8 basis points in AUM.


About Backstop Solutions

Backstop’s mission is to help the institutional investment industry use time to its fullest potential. We develop technology to simplify and streamline otherwise time-consuming tasks and processes, enabling our clients to quickly and easily access, share and manage the knowledge that’s critical to their day-to-day business success. Backstop provides its industry-leading cloud-based productivity suite to investment consultants, pensions, funds of funds, family offices, endowments, foundations, private equity, hedge funds and real estate investment firms.

BarclayHedge, a division of Backstop, currently maintains data on more than 6,900 hedge funds, funds of funds and CTAs. Institutional investors, brokerage firms and private banks worldwide utilize BarclayHedge indices as performance benchmarks for the hedge fund and managed futures industries.



Janet Falk

(212) 677 5770