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Growth in Hedge Fund Assets Accelerates as Net Inflows Leap Nearly 55% Month-over-Month

CTAs March on to Seventh-Straight Month of Positive Net Flows with $3.3 Billion Pickup in May

Investors poured another $36 billion into hedge funds in May, adding nearly a percentage point of growth to industry assets. May marked the third consecutive period of net inflows in what appears to be an accelerating trend. The Barclay Fund Flow Indicator published by BarclayHedge, a division of Backstop Solutions, shows $19.1 billion in net inflows in March, a 22% jump in April ($23.3 billion) followed by a nearly 55% leap in May.

A $20.7 billion trading profit in May brought total hedge fund industry assets to nearly $4.27 trillion as the month ended.

“Investors found ample grounds for enthusiasm in May as markets flourished in the sunshine of economic optimism and the lifting of pandemic gloom,” said Ben Crawford, Head of Research at Backstop BarclayHedge. “Moreover, and perhaps more critically, the bright outlook was reinforced in May by a number of indicators that included increased hiring and declining unemployment figures in the U.S., ramping manufacturing activity in many regions of the world (including the U.S., U.K., and Eurozone) and new growth records for disparate corners of the market, such as the U.S. service sector and Chinese macroeconomic growth—all of which made many hedge fund- and managed future- sectors look like fertile soils.”

The majority of hedge funds subsectors posted net inflows in May. All subsectors were led by Multi-Strategy funds which raked in an additional $10.6 billion. Also increasing were Fixed Income funds $7.6 billion, Balanced (Stock & Bond) funds $7.0 billion, Event Driven funds $3.1 billion and Emerging Markets – Global up $2.0 billion.

Sectors experiencing net redemptions in May included Macro funds with -$1.9 billion in outflows, Equity Long Bias funds down -$643.4 million and Equity Market Neutral funds with -$635.8 million in net redemptions.

The managed futures industry experienced net inflows for the seventh consecutive month in May, adding $3.3 billion in new assets. All four CTA sectors tracked posted inflows in May. Systematic CTAs embraced the largest nominal growth in assets with $2.6 billion, (+0.8% of assets). Discretionary CTAs brought in $423 million which amounted to an increase in subsector assets (+2.8%). Hybrid CTAs added $276.3 million (+1.6% of assets), while Multi Advisor Futures Funds saw $60.3 million (+0.5% of assets).

12-Month Flow Trends

Over the past twelve months, the hedge fund industry in aggregate added $147.3 billion to their coffers. Accelerating interest in hedge funds combined with a total of $477.1 billion in trading profits to lift total industry assets to the $4.27 trillion mark as May ended, up from $4.18 trillion at the end of April and $3.04 trillion a year earlier.

Most hedge fund sectors continued to post 12-month net inflows through May. Leading the 11 sectors was Fixed Asset funds which brought in +$65.8 billion (+9.6% of assets),

Other sectors adding significantly to assets over the 12 months included Sector Specific funds which added $57.6 billion (+30.1% of assets), Emerging Markets – Asia $28.6 billion (+26.5% of assets), Event Driven $20.7 billion (+12.0% of assets), and Multi-Strategy funds which brought in $15.9 billion (+4.7% of assets).

Sectors with the largest 12-month redemptions included Balanced (Stocks & Bonds) funds with -$22.4 billion (-6.1% of assets), Equity Long Bias funds which shed -$17.7 billion (-5.6% of assets), Macro Funds -$15.5 billion (-9.0% of assets), Equity Market Neutral -$8.5 billion (-12.1% of assets) and Equity Long/Short funds which saw -$6.6 billion (-4.0% of assets).

The managed futures industry experienced $23.8 billion in inflows over the 12-month period ending in May. A $21.7 billion trading profit over the period contributed to total industry assets of $339.2 billion, up from $284.1 billion a year earlier.

All four CTA subsectors also enjoyed 12-month inflows through May. Systematic CTAs grew the most in terms of nominal dollars ($19.5 billion), followed by Discretionary CTAs ($2.6 billion) and Hybrid CTAs ($1.7 billion). Growth in AUM among Discretionary CTAs and Hybrid CTAs has been significantly faster so far this year vis-à-vis Systematic CTAs, expanding +23.1% and +21.9% respectively versus Systematic CTAs’ more moderate +7.3% growth. Multi Advisor Futures Funds added +$97.5 million over the same interval, which amounted to a modest increase of +0.9% of assets.

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 7,100 hedge funds, funds of funds and CTAs. The BarclayHedge Indices are utilized by institutional investors, brokerage firms and private banks worldwide as performance benchmarks for the hedge fund and managed futures industries.


Janet Falk

(212) 677-5770