FAIRFIELD, IOWA SEPTEMBER 18, 2019
Hedge fund redemptions slowed from the prior month’s pace in July, though outflows continued for a second straight month as the hedge fund industry experienced $8.1 billion in net redemptions.
July’s redemptions, which represented 0.3% of industry assets, were an improvement on June’s $12.2 billion in outflows according to the Barclay Fund Flow Indicator published by BarclayHedge, a division of Backstop Solutions.
Monthly trading gains of $17.5 billion brought total hedge fund industry assets to more than $3.12 trillion as July ended, down from $3.15 trillion in June.
While U.S. hedge funds rode June’s equity market rally to net inflows in July, investors’ ongoing concerns over the potential for a messy break between the U.K. and the European Union dragged funds in the U.K. and Europe heavily into net redemption territory for the month.
Data from more than 6,000 funds (excluding CTAs) included in the BarclayHedge database showed July’s worldwide redemption trend was largely the result of activity in the U.K and Europe. July saw hedge funds in the U.K. and its offshore islands experiencing nearly $8.4 billion in redemptions, 1.4% of assets, while those in Continental Europe shed nearly $3.0 billion, 0.4% of assets.
“With each month that goes by without a Brexit deal, investors grow increasingly skittish,” said Sol Waksman, president of BarclayHedge. “Those investor jitters were on full display in July’s U.K. and Europe redemptions. Manufacturing contraction in the Eurozone didn’t help and together those forces far offset the benefits U.S. funds felt from a June equity rally and some positive economic news.”
For the 12 months ending July 31, the hedge fund industry experienced $161.3 billion in redemptions, 5.3% of industry assets.
Redemptions remained the norm for most hedge fund sectors for the 12 months ending July 31, though a handful did post net inflows. Macro funds posted $17.0 billion in inflows for the 12 months, 8.2% of assets, while Event Driven funds took in $14.8 billion, 10.2% of assets. Emerging Markets-Asia funds took in $646.7 million over the period, 0.6% of assets, and Convertible Arbitrage funds added $218.5 million, 1.1% of assets.
Funds that were particularly exposed to the volatility in equity and bond markets over the past year continued to be those with the largest 12-month redemption totals through July. Equity Long/Short funds experienced $36.5 billion in redemptions for the period, 16.9% of assets, Equity Long Bias funds saw outflows of $28.8 billion, 8.5% of assets, Balanced (Stocks & Bonds) funds shed $28.1 billion over the 12 months, 11.4% of assets, and Fixed Income funds experienced $27.1 billion in outflows, 4.6% of assets.
Continuing a trend that’s gone beyond a year, managed futures funds faced another month of net redemptions in July. CTA funds experienced $2.6 billion in outflows for the month, 0.8% of industry assets. Again, concerns over the U.K.’s planned exit from the European Union were in evidence, with the month’s total managed futures redemptions largely resulting from nearly $2.4 billion in outflows, 3.0% of assets, experienced by CTA funds in the U.K. and its offshore islands.
For the 12 months ending July 31, managed futures funds experienced $20.5 billion in redemptions, 5.7% of assets. Monthly trading gains of $7.6 billion brought total CTA industry assets to $327.3 billion at the end of July, up from $324.8 billion at the end of June.
The monthly Barclay Fund Flow Indicator, published by BarclayHedge, can be found here.
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BarclayHedge, a division of Backstop, currently maintains data on more than 7,100 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.
BarclayHedge, a division of Backstop Solutions Group