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Hedge Fund Allocations Soar, Borne of Both Greed and Fear

CTAs See Modest Net Redemptions but Maintain Inflows Over the 12-Month Period

The hedge fund industry continued to attract new assets in August with $30.5 billion in inflows. August’s inflows represented 0.69% of industry assets, according to the Barclay Fund Flow Indicator published by BarclayHedge, a division of Backstop Solutions.

August marked the sixth consecutive month of hedge fund industry inflows, totaling $143.8 billion since March. A $37.8 billion monthly trading profit brought total industry assets to nearly $4.52 trillion as August ended.

“As economies continued to rebound and equity markets surged throughout the summer, investors saw growth and speculative opportunities in hedge fund investments,” said Ben Crawford, Head of Research at BarclayHedge. “Hedge Funds may also be having a moment for less optimistic reasons: They have a history of performing well during inflationary periods. While central bankers contend that the recent spike in the cost of living will be transitory, forecasters in the U.S. and elsewhere are revising their inflation expectations upward for multiple periods to come.”

Most hedge fund sub-sectors reported inflows in August. Fixed Income funds set the pace bringing in $10.4 billion, 1.1% of assets while Multi-Strategy funds added $7.5 billion, 1.6% of assets, Balanced (Stocks & Bonds) funds saw $5.1 billion in inflows, 0.8% of assets, Sector Specific funds added $2.96 billion, 0.8% of assets, and Event Driven funds brought in $2.28 billion, 0.8% of assets.

The handful of sub-sectors experiencing net redemptions in August included Emerging Markets – Global funds shedding $2.7 billion, 1.3% of assets, Emerging Markets – Asia funds with $2.47 in outflows, 1.3% of assets, Convertible Arbitrage funds with $769.2 million in redemptions, 2.4% of assets, and Equity Market Neutral funds with $251.5 million in outflows, 0.4% of assets.

After posting inflows in July, the managed futures industry returned to net redemptions in August with $168.6 million in outflows. The four CTA sub-sectors tracked were evenly split between inflows and redemptions during the month. Discretionary CTAs brought in $672.2 million in August, 4.3% of assets, while Multi Advisor Futures Funds saw $152.3 million in inflows, 1.2% of assets. On the redemption side of the ledger, Systematic CTAs shed $763.6 million during the month, 0.24% of assets, while Hybrid CTAs experienced $77.7 million in outflows, 0.42% of assets.

12-Month Flow Trends

For the 12 months through August the hedge fund industry experienced $146.8 billion in inflows. A $103.6 billion trading profit over the period brought total industry assets to $4.52 trillion as August ended, up from $4.40 trillion at the end of July and up from nearly $3.38 trillion a year earlier.

Of the 19 hedge fund sub-sectors tracked, 12 posted 12-month inflows through August. Fixed Income funds led the way adding $78.7 billion, 10.2% of assets, while Sector Specific funds brought in $56.6 billion, 25.3% of assets, and Multi-Strategy funds saw $25.6 billion in inflows, 7.4% of assets.

Other hedge fund sectors posting notable 12-month inflows included Emerging Markets – Asia funds adding $22.0 billion, 17.1% of assets, Event Driven funds bringing in $21.5 billion, 11.3% of assets, and Equity Long-Only funds with $13.1 billion in inflows, 8.9% of assets.

Among the sectors with the largest 12-month outflows were Balanced (Stocks & Bonds) funds with $28.2 billion in redemptions, 6.2% of assets, Equity Long Bias funds shedding $15.3 billion, 4.6% of assets, Macro funds with $13.3 billion in outflows, 7.3% of assets, Equity Market Neutral funds with $5.7 billion in redemptions, 9.3% of assets, and Equity Long/Short funds with $4.0 billion in outflows, 2.3% of assets.

Over the 12 months through August CTAs saw $9.72 billion in inflows. A $21.6 billion trading profit over the period brought total industry assets to $339.9 billion, up from $304.8 billion a year earlier.

All four CTA sectors tracked posted inflows over the 12-month period. Systematic CTAs set the pace with $4.9 billion in inflows, 1.7% of assets. Discretionary CTAs added $3.1 billion, 27.2% of assets, Hybrid CTAs brought in $1.7 billion, 18.1% of assets, and Multi Advisor Futures Funds saw $660.2 million in inflows, 6.4% 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 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