FAIRFIELD, Iowa, December 20, 2018 — Hedge fund redemptions slowed in October after spiking to a five-year high the month before, according to the Barclay Fund Flow Indicator, published by BarclayHedge, now a division of Backstop Solutions.
Data from more than 5,000 hedge funds in the BarclayHedge database revealed that the hedge fund industry (excluding CTAs) redeemed an estimated $20.7 billion (-0.7% of assets) in October, a month after outflows surged to a five-year high of $39.1 billion (-1.3% of assets).
Industry assets sank to an eight-month low of $2.97 trillion. Hedge fund investors’ skepticism waned in October even as the market climate darkened around the globe, according to the Barclay Fund Flow Indicator, a monthly big-picture report on the health of the alternative investments industry.
“The prospects of rising interest rates, a strengthening dollar and persistent trade turmoil undoubtedly kept investors on edge in October,” said Sol Waksman, founder and president of BarclayHedge.
“Year-to-date hedge fund flows sank into negative territory in October with redemptions of $17.9 billion (-0.6% of assets),” Waksman said. “By contrast, the industry raked in $89.6 billion (3.2% of assets) in the first 10 months of 2017.”
At the sector level, Sector Specific funds had the biggest 12-month inflows at $14.3 billion (10.3% of assets). Macro funds had the largest 12-month redemptions at $12.0 billion (-5.4% of assets).
At the regional level, hedge funds based in the U.S. and Canada added cash in October, while European, Latin American, Chinese and Japanese funds endured notable outflows. Investors added $2.7 billion (0.2% of assets) to U.S. funds but pulled $9.4 billion (-1.6% of assets) out of funds based in the U.K.
Hedge funds based in Latin America gave up more than a third of their assets in 12 months amid economic and political turmoil in Venezuela, Brazil, Mexico and beyond. “Investors yanked $7.9 billion (-35.8% of assets) from these funds between October 2017 and October 2018,” Waksman said.
In the managed futures sector, Commodity Trading Advisor (CTA) funds saw outflows surge nearly eleven-fold to $3.2 billion (-0.9% of assets) in October, a 22-month high and up from $300 million (-0.8% of assets) the month before.
BarclayHedge is the global leader in providing independent, research-based information services to the alternative investment industry. Founded in 1985, Barclay currently maintains data on more than 6,900 hedge funds, funds of funds, and CTAs. No one has been in the business of collecting alternative investment data longer than BarclayHedge.
Institutional investors, brokerage firms, and private banks worldwide utilize BarclayHedge indices as performance benchmarks for the hedge fund and managed futures industries.