Hedge fund redemptions hit a 44-month high of $20.7 billion in December, according to the latest monthly TrimTabs/BarclayHedge Hedge Fund Flow Report, which noted that the industry earned 8.5% in 2012, far below the S&P 500’s 13.4% increase for the year.
“Underperformance versus the S&P 500 Index is a likely culprit in last year’s outflows,” said Sol Waksman, founder and president of BarclayHedge. “We found that from 2010 through 2012, hedge funds gained 14.1% while the S&P 500 Index rose 27.9%. That’s a major shift from the trend over the past five years, when hedge funds gained 10.7% while the S&P 500 was essentially flat.”
Despite lagging performance over the past three years, hedge funds outperformed the S&P 500 Index in the last three months of 2012, gaining 2.46% while the S&P 500 fell 1.0%. Hedge fund investors enjoyed a net 1.7% gain in December, besting a 0.7% rise in the S&P 500 Index for the month.
The Hedge Fund Flow Report also noted that stock-picking hedge fund managers had a good 2012 and a great December.
“Managers of Equity Long Only hedge funds found their groove in December, earning an impressive 4.8% and besting the S&P 500 by 406 bps,” Waksman said. Equity Long Only funds earned 15.5% in 2012, the best performers among the 13 hedge funds categories tracked by BarclayHedge and TrimTabs. Fixed Income hedge funds boasted the strongest 2012 inflows at $36.6 billion.
The January 2013 TrimTabs/BarclayHedge Survey of Hedge Fund Managers found widespread optimism about the U.S. economy and the short-term prospects for stocks in 2013. The survey found that bullishness on the S&P 500 surged to a 12-month high in January and that more than two-thirds of the survey’s 121 respondents see less than a 50/50 chance of a sharp correction in the S&P 500 in the first half of 2013.
The TrimTabs/BarclayHedge database tracks hedge fund flows on a monthly basis. The TrimTabs/BarclayHedge Hedge Fund Flow Report provides detailed analysis of these flows as well as relevant topical studies. Click here for further information.
BarclayHedge is a leading hedge fund data vendor and one of the foremost sources for proprietary research in the field of alternative investments. From its origin as a research specialist and performance measurement firm, BarclayHedge has developed complete client services as a publisher, database and software provider, and industry consultant.
TrimTabs Investment Research is the only independent research service that publishes detailed daily coverage of U.S. stock market liquidity--including mutual fund flows and exchange-traded fund flows--as well as weekly withheld income and employment tax collections. Founded by Charles Biderman, TrimTabs has provided institutional investors with trading strategies since 1990. For more information, please visit us here.