What Sectors will be Hot – or Not – in 2018? Fixed Income Funds Face Highest Redemption Rates

FAIRFIELD, Iowa, December 15, 2017 — Year-end is traditionally a time when many investors review their investment portfolios and start making decisions about how to best rebalance their holdings. This is particularly true for hedge fund investors since many funds limit the number of periodic redemption dates.

In response to a recent BarclayHedge survey, fund of funds managers and other large investors responded to questions regarding inflows and redemption requests for five major hedge fund sectors: Equity Hedged, Fixed Income, Global Macro/Managed Futures, Multi-Strategy, and Emerging/Frontier Markets.

When asked which sector currently has the strongest inflow of funds from investors, 29% of the survey respondents chose Equity Hedged, 27% selected Multi-Strategy, 22% identified the Global Macro sector, and 20% selected Emerging/Frontier Markets.

“As developed economies continue to grow, export demand in emerging markets grows in tandem,” says Sol Waksman, founder and president of BarclayHedge. “Based on traditional valuation methodologies, Emerging Market equities appear to be underpriced relative to US competitors in similar industries.”

Redemption Requests Signal Changing Trends

More than 31% of the survey respondents reported outflows in Fixed Income, making it the leading sector for redemption requests. Twenty-two percent cited redemptions in Global Macro/Managed Futures, 19% selected Multi-Strategy, and 17% pointed to the Equity Hedged sector. Only 11% reported redemptions in the Emerging/Frontier Markets sector.

“Now that the Fed has ended quantitative easing, there is uncertainty in the air regarding Fixed Income investments,” says Sol Waksman, founder and president of BarclayHedge. “With interest rates expected to continue rising, investor interest in hedge funds pursuing fixed income strategies is on the wane.”

The survey of 57 funds of hedge fund managers and other large investors was conducted by BarclayHedge between November 13 and November 30, 2017.

The survey is conducted monthly, with comprehensive results available here.

Sol Waksman is the founder and president of BarclayHedge. Waksman is an industry expert and experienced media source, providing perspectives on hedge fund and managed futures trends.

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 6,600 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.