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TrimTabs and BarclayHedge report hedge fund redemptions at $7.4bn in July 2012 with assets down 23.2% since peak

Tuesday, September 11, 2012
Opalesque Industry Update - BarclayHedge and TrimTabs Investment Research reported that the hedge fund industry redeemed $7.4 billion (0.4% of assets) in July, building on outflows of $4.2 billion in June. Based on data from 3,119 funds, the TrimTabs/BarclayHedge Hedge Fund Flow Report estimated that industry assets were $1.87 trillion in July, down 23.2% from their June 2008 peak of $2.4 trillion.

“We've seen a notable reversal in hedge fund industry fortunes during the past year,” said Sol Waksman, founder and president of BarclayHedge. “The industry experienced outflows in seven of the 12 months from August 2011 to July 2012, losing a net $29.3 billion. From August 2010 to July 2011, the industry gained $96.2 billion with inflows in 10 out of 12 months.”

Echoing a theme that has persisted throughout 2012, the hedge fund industry in July underperformed the benchmark S&P 500, gaining only 0.75%, while the S&P 500 rose 1.26%. For the first seven months of 2012, the industry earned a 3.1% return while the S&P 500 rose 9.7%.

TrimTabs and BarclayHedge track 13 major hedge fund categories representing strategies such as fixed income, merger arbitrage, and equity market investments. Macro funds, which exploit shifts in macroeconomic trends around the globe, gained 1.5% in July — the only category to outperform the S&P 500 for the month.

“The performance of these individual hedge fund categories underscores the frustrations of hedge fund investors over the past few years,” said Charles Biderman, founder and CEO of TrimTabs. “Fixed Income funds are a prime example. They were one of the top categories for the past year, but they slid down into the middle of the pack in July with net outflows of $188 million and a 0.8% return.”

Among the eight global regions tracked in the report, hedge funds based in Continental Europe had the highest returns in July at 1.3%. Nevertheless, they experienced outflows worth 3.3% of assets. “We are seeing a substantial disconnect between performance and flows among the regional fund categories,” said Minyi Chen, Vice President at TrimTabs. “For the past 12 months, Continental Europe funds performed best at 0.2%, but they had the biggest outflows at -23.5% of assets.”

Meanwhile, the August 2012 TrimTabs/BarclayHedge Survey of Hedge Fund Managers found that sentiment was evenly divided between neutral and bullish on the performance of the S&P 500 for September. Conducted in late August, the survey of 63 hedge fund managers also found that they had become significantly more bearish on 10-year Treasury notes, while bullish sentiment on the U.S. dollar plunged to a 12-month low.

Press release

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