The hedge fund industry returned to net outflows in February with $8.1 billion in redemptions, a reversal from January’s $21.2 billion in inflows.
February’s redemptions represented 0.2% of industry assets, according to the Barclay Fund Flow Indicator published by BarclayHedge, a division of Backstop Solutions.
A February trading loss of $57.9 billion brought total hedge fund industry assets to nearly $3.21 trillion as February ended, down from $3.26 trillion at the end of January.
February’s redemptions were driven largely by $8.9 billion in outflows from hedge funds in the U.K. and its offshore islands and $1.2 billion from funds in Continental Europe. Data from 7,100 funds (excluding CTAs) in the BarclayHedge database saw hedge funds in the U.S. and its offshore islands having a better experience, posting $3.4 billion in February inflows.
“Slowing economic activity in the U.K. and across the Eurozone coupled with a downgraded projection for 2020 growth from the European Central Bank prompted investors to look for opportunities elsewhere in February,” said Sol Waksman, president of BarclayHedge. “The picture was brighter for hedge funds in the U.S. where stocks and corporate bonds enjoyed their best year in a decade in 2019.”
Over the 12-month period through February, the hedge fund industry experienced $84.5 billion in redemptions. A $107.2 billion trading profit over the period left industry assets at nearly $3.21 trillion at the end of the month, up from $2.96 trillion a year earlier.
A handful of hedge fund sectors bucked the 12-month redemption trend through February. Among them were Event Driven funds with $30.0 billion in inflows, 21.5% of assets. Sector Specific funds took in $6.8 billion over the period, 4.0% of assets, while Multi-Strategy funds added $2.8 billion, 0.9% assets.
Much more common were sectors with 12-month redemptions. Among the largest were Equity Long/Short funds which shed $38.8 billion over the 12 months, 18.5% of assets, Equity Long Bias funds which saw $15.5 billion in outflows, 4.7% of assets, Fixed Income funds with $14.2 billion in redemptions, 2.6% of assets, and Equity Market Neutral funds which experienced $12.4 million in outflows, 13.5% of assets.
Managed futures funds also experienced net outflows in February with $1.7 billion in redemptions. A $6.1 billion trading loss in February left total CTA industry assets at $307.9 billion as the month ended, down from $315.7 billion at the end of January.
Redemptions from CTA funds were a worldwide trend in February led by $1.5 billion in outflows from managed futures funds in the U.S. and its offshore islands, 0.8% of assets. CTAs in Continental Europe experienced $988.3 million in outflows, 2.8% of assets, while funds in the U.K. and its offshore islands saw $517.2 million in redemptions, 0.8% of assets.
For the 12-month period through February, CTAs experienced $15.3 billion in redemptions, 4.3% of industry assets. A $9.6 billion trading profit over the period brought industry assets to the $307.9 billion figure as the month ended, down from $351.1 billion a year earlier.
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. 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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