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Hedge Funds Redeem $8.9 Billion in June Amid Worries over Trade and Interest Rates

FAIRFIELD, Iowa, August 20, 2018 — Redemptions from hedge funds hit a 20-month high in June, according to the Barclay Fund Flow Indicator, as the financial markets weighed the risks of trade disputes and rising interest rates. Hedge fund industry assets remained at an all-time high of $3.0 trillion.

Data drawn from more than 5,000 hedge funds in the BarclayHedge database estimated that the hedge fund industry (excluding CTAs) gave up $8.9 billion (-0.3% of assets) in June, reversing inflows of $4.0 billion (0.1% of assets) the month before. June marked the largest outflow since October 2016, according to the Barclay Fund Flow Indicator, a monthly big-picture report on the health of the alternative investments industry.

“Investors faced multiple uncertainties in June,” said Sol Waksman, founder and president of BarclayHedge. “We had a strong U.S. unemployment report, but we also had more headlines about trade disputes and the prospect of higher interest rates in the months ahead. Economic ambiguities and hedge fund outflows often go hand in hand.”

Waksman noted that despite June’s setback, industry assets climbed 3.7% year-to-date and surged 16.2% over the trailing 12 months.

Fixed Income hedge funds saw the heaviest total inflows in the trailing 12 months ending in June, adding $24.2 billion (5.0% of assets). Equity Market Neutral funds had the strongest 12-month inflows as a percentage of assets ($15.3 billion, 20.7% of assets).

At the regional level, hedge funds focused on the U.S. and its offshore islands fared the worst in June, giving up $9.1 billion (-0.6% of assets) and reversing an inflow of $7.4 billion (0.5% of assets) the month before. “Turmoil over tariffs and other issues seems to have spooked these investors,” Waksman said.

Demand for hedge funds focusing on the U.K. and its offshore islands turned negative in June. “U.K.-centered funds have seen a troubling turnabout,” Waksman said. “Demand for U.K. funds flattened in the past two months, stalling the trend of the past 12 months, when they hauled in $70.5 billion (14.4% of assets).”

In the managed futures sector, commodity trading advisor (CTA) funds added assets in June, halting a four-month slide. Rising commodity prices worldwide have helped push CTA assets up 7.2% over the past 12 months.

“The return to asset growth in June looks like a vote of confidence in the CTA sector, which seemed unnerved by the persistent ascent of oil prices in the first half of 2018,” Waksman said.

The Barclay Fund Flow Indicator is published monthly, with comprehensive results available here.

Sol Waksman is an experienced media source, providing perspectives on hedge fund and managed futures trends. For more commentary or background, call 641-472-3456 or email swaksman@barclayhedge.com.

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 6,400 hedge funds, fund 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.