Hedge fund redemptions continued to decline from their COVID-19 pandemic-fueled peak of $85.6 billion in March. Net redemptions in May were $8.0 billion, 0.3% of industry assets, according to the Barclay Fund Flow Indicator published by BarclayHedge, a division of Backstop Solutions.
In spite of the redemptions, the hedge fund industry continued to grow. Assets under management rose to $3.04 trillion, up from $2.99 trillion a month earlier based on trading profits of $49.9 billion in May.
Data from 7,000 funds (excluding CTAs) in the BarclayHedge database showed funds in the U.S. and its offshore islands again shaping the hedge fund industry flow trend in May, as funds in the region experienced more than $8.5 billion in redemptions. Investors drew another $1.2 billion from funds in the U.K. and its offshore islands. Elsewhere in the world, investors added nearly $3.0 billion to funds.
“As the COVID-19 pandemic spread, economies shut down, retail sales and services collapsed, unemployment levels stayed extremely high and many hedge fund investors chose to look for opportunities elsewhere,” said Sol Waksman, president of BarclayHedge.
Over the 12-month period through May, hedge funds experienced $196.8 billion in redemptions. May’s $49.9 billion trading profit brought the industry’s 12-month investment performance into positive territory with an $8.5 billion profit. Total industry assets of $3.04 trillion at the end of May were up from $2.99 trillion at the end of April, though down from nearly $3.07 trillion a year earlier.
Only four hedge fund sectors posted 12-month inflows. Event Driven funds brought in $22.3 billion, 14.0% of assets, Sector Specific funds added $10.4 billion, 6.1% of assets, Convertible Arbitrage funds saw $3.1 billion in inflows, 15.6% of assets, and Emerging Markets – Latin America funds brought in $1.4 billion, 12.4% of assets.
Sectors with the largest 12-month redemptions included Fixed Income funds with $45.5 billion in outflows, 7.2% of assets, Equity Long/Short funds with $42.6 billion in redemptions, 20.7% of assets, and Equity Long Bias funds which shed $25.6 billion, 7.9% of assets.
As in April, the managed futures industry fared better than hedge funds in May with $1.3 billion in inflows, a slight drop from the $1.5 billion CTAs added a month earlier. A $900 million trading loss brought industry assets to $284.1 billion, up from $280.8 billion a month earlier.
CTAs in the U.S. and its offshore islands set the pace for May, bringing in $1.6 billion, 1.0% of assets. Funds in Continental Europe also added assets during the month with $85.4 million in inflows, 0.3% of assets. Among the regions experiencing net CTA outflows, managed futures funds in the U.K. and its offshore islands experienced $306.0 million in redemptions, 0.5% of assets.
Over the past 12 months, the managed futures industry experienced $25.3 billion in redemptions, 4.6% of industry assets. A $4.6 billion 12-month trading loss brought total industry assets to that $284.1 billion figure at the end of May, down from $320.7 billion a year earlier.
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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.
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