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Hedge Funds Take in $4.0 Billion in May as Strengthening U.S. Economy Boosts Investor Optimism

FAIRFIELD, Iowa, July 17, 2018 — Demand for hedge funds crept upward in May, according to the Barclay Fund Flow Indicator, as equity markets rebounded and the U.S. economy improved. 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) took in $4.0 billion (0.1% of assets) in May, reversing $1.9 billion in redemptions the month before. Industry assets climbed 3.5% year-to-date and surged 17.6% over the trailing 12 months, according to the Barclay Fund Flow Indicator, a monthly big-picture report on the health of the alternative investments industry.

“For all the stress over trade and volatility in May, hedge fund investors noted that U.S. economic fundamentals improved amid strengthening corporate earnings, low inflation pressures, and the prospect of mild upticks in interest rates,” said Sol Waksman, founder and president of BarclayHedge.

Fixed Income hedge funds enjoyed the heaviest total inflows in the trailing 12 months ending in May, adding $28.6 billion (6.0% of assets). Equity Market Neutral funds saw the heaviest 12-month demand when measured by percentage of assets ($13.4 billion, 18.3% of assets).

At the regional level, hedge funds focusing on the U.S. and Offshore Islands fared best in May, taking $7.4 billion (0.5% of assets) and reversing two months of redemptions. Funds focusing on Continental Europe suffered the highest May outflows at $10.4 billion (-1.4% of assets). "Hedge fund investors are weighing the risk of a rising populist tide in Italy and across the continent,” Waksman said.

“Demand for hedge funds focusing on the U.K. and Offshore Islands slowed to a trickle. These funds bear watching,” Waksman noted. “They added a slim $650 million (0.1% of assets) in May, a sharp slowdown from the trend of the past 12 months, when they had the strongest regional flows.”

In the managed futures sector, commodity trading adviser (CTA) funds added $530 million (0.1% of assets) in May, a turnabout from outflows of $1.3 billion (-0.4% of assets) the month before. CTAs have endured tepid demand since March, a notable reversal from January-February, when they raked in a combined $15.4 billion (4.2% of assets).

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.