The hedge fund industry broke free from a four-month redemption streak in October with $1.9 billion in net inflows for the month.
October’s inflows represented 0.1% of industry assets and were a turnaround from September’s $14.7 billion in redemptions, according to the Barclay Fund Flow Indicator published by BarclayHedge, a division of Backstop Solutions.
Coupled with $14.7 billion in October trading profits, the inflows brought total industry assets to more than $3.13 trillion as the month ended, up from $3.05 trillion at the end of September.
October’s net inflows came despite troubling economic news that led to significant redemptions from hedge funds in the U.S., its offshore islands, China and Hong Kong.
Data from the more than 6,000 hedge funds (excluding CTAs) in the BarclayHedge database showed investors pulling nearly $3.5 billion from hedge funds in the U.S. and its offshore islands during October, while funds in China and Hong Kong experienced more than $1.0 billion in redemptions.
Still, hedge funds in the U.K. and its offshore islands managed to shake off the Brexit fears that had troubled investors to post nearly $2.9 billion in inflows, contributing to the industry-wide tally.
“News of manufacturing downturns around the world, recession fears and heightened U.S.-China trade tensions shaped many investors’ attitudes,” said Sol Waksman, president of BarclayHedge. “Still, some regions experienced positive flows as did a number of hedge fund sectors that contributed to industry-wide inflows.”
For the 12 months ending Oct. 31, the hedge fund industry experienced $147.2 billion in redemptions, 5.0% of assets. A $154.0 billion trading profit over the period brought total industry assets to more than $3.13 trillion at the end of October, up from more than $2.97 trillion a year earlier.
Net redemptions remained the norm for most hedge fund sectors over that same 12-month period, though a few continued to buck the trend. Among those posting net inflows for the 12 months were Macro funds with $21.9 billion in inflows, 11.2% of assets, Event Driven funds bringing in $16.9 billion, 11.8% of assets, and Emerging Market – Latin America funds adding $1.6 billion, 14.6% of assets.
The sectors with the largest 12-month redemptions included Equity Long/Short funds which shed $41.8 billion, 19.0% of assets, Equity Long Bias funds with $35.2 billion in outflows, 10.7% of assets, and Fixed Income funds which experienced $20.0 billion in outflows, 3.5% of assets.
The managed futures industry also experienced net inflows in October, bringing in more than $899.5 million in assets. A $3.3 billion trading loss left total industry assets at $305.4 billion as October ended, down from $308.4 billion at the end of September.
“CTA funds continued to attract investors looking for diversification in the face of worrisome economic indicators that challenged other sectors,” said Waksman.
Geographic regions remained split between those experiencing managed futures inflows and redemptions in October. CTA funds in the U.S. and its offshore islands took in more than $1.0 billion during the month, 0.5% of assets, while funds in Continental Europe experienced $102.4 million in inflows, 0.3% of assets. Among the regions on the other side of the ledger, the U.K. and its offshore islands experienced $157.1 million in outflows, 0.3% of assets, while funds in Asia excluding China and Japan shed $7.4 million, 0.1% of assets.
For the 12 months ending Oct. 31, managed futures funds experienced $18.4 billion in redemptions, 5.2% of industry assets. An $11.3 billion trading profit over the period contributed to the industry’s $305.4 billion in total assets at the end of October, down from $354.6 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. Institutional investors, brokerage firms, and private banks worldwide utilize BarclayHedge indices as performance benchmarks for the hedge fund and managed futures industries.
BarclayHedge, a division of Backstop Solutions Group