Fri, Apr 10, 2020
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Hedge funds end 2019 with second straight month of outflows

Wednesday, February 19, 2020
Opalesque Industry Update - The hedge fund industry experienced a second straight month of net outflows in December with nearly $29.0 billion in redemptions, up from November's $4.7 billion in outflows.

December's redemptions represented 0.9% of industry assets, according to the Barclay Fund Flow Indicator published by BarclayHedge, a division of Backstop Solutions.

A $34.7 billion December trading profit boosted industry assets to more than $3.19 trillion as the year closed, up from $3.16 trillion a month earlier.

December's redemptions were driven largely by a variety of troubling economic signs in the U.S. over the fall months, coupled with China's economic slowdown. The ongoing trade dispute between the two countries contributed to some of the economic indicators, as well as to investors' concerns.

December data from 6,000 funds (excluding CTAs) in the BarclayHedge database showed the scale of U.S. redemptions making December's global outcome inevitable. Investors took more than $38.5 billion from U.S. hedge funds in December. Another $1.1 billion in outflows from funds in China and Hong Kong added to the global outflow total.

"Investors saw the worst U.S. manufacturing month since the Great Recession coupled with a downturn in U.S. service sector activity. A continuing decline in consumer confidence over the fall months added to recession concerns," said Sol Waksman, president of BarclayHedge. "Meanwhile, reports of China's economic growth sinking to a 27-year low coupled with news that Hong Kong had entered a recession added to investors' jitters."

Over the 12 months in 2019, the hedge fund industry experienced $109.6 billion in redemptions, 3.8% of assets. A $261.6 billion trading profit in 2019 brought total industry assets to more than $3.19 trillion as December closed, up from nearly $2.88 trillion a year earlier.

While most hedge fund sectors experienced net redemptions over the 12 months ending Dec. 31, a few brought in new assets. Sectors experiencing 12-month inflows included Macro funds which took in $26.9 billion, 14.5% of assets, Event Driven funds which added $26.5 billion, 19.3% of assets, and Emerging Market - Latin America funds with $1.9 billion in inflows, 18.1% of assets.

Over the 12 months, equity- and fixed-income-focused hedge fund sectors set the redemption pace reflecting uncertainty in their underlying markets. Sectors with the largest redemptions over the year included Equity Long/Short funds which shed $42.0 billion, 19.5% of assets, Equity Long Bias funds with $32.7 billion in redemptions, 10.1% of assets, and Fixed Income funds which saw $21.9 billion in outflows, 3.9% of assets.

The managed futures industry had a better experience in December as CTAs posted $1.2 billion in inflows, 0.4% of industry assets. A $500 million trading profit in December brought total CTA industry assets to $318.4 billion as December ended, up from $310.2 billion at the end of November.

"CTAs' performance started to pick up in the year's final months based on strong global equity markets and rising government bond yields," said Waksman. "With the improved performance came additional investor assets."

December's inflows were driven by CTAs in the U.S. and its offshore islands which added $3.9 billion, 1.9% of assets.

Elsewhere in the world, redemptions were the standard in December, led by CTAs in Continental Europe which experienced $1.6 billion in outflows, 4.5% of assets, and funds in the U.K. and its offshore islands which saw $983.0 million in redemptions, 1.7% of assets.

Over the course of 2019, CTA funds experienced $15.9 billion in outflows, 4.5% of industry assets. A $13.1 billion trading profit over the 12-month period contributed to the managed futures industry's $318.4 billion in total assets at the end of December, down from $355.1 billion a year earlier.

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Investing: Ray Dalio's Bridgewater scales down European short bets after $3.2bn windfall, Here's what top hedge funds are buying in the coronavirus stock market crash[more]

    Ray Dalio's Bridgewater scales down European short bets after $3.2bn windfall From Financial News: Bridgewater Associates, the world's biggest hedge fund, has retreated from shorting European stocks after making an estimated €2.9bn ($3.2bn), as its founder and co-chairman Ray Dalio c

  2. Bill Ackman writes letter to shareholders on coronavirus[more]

    Pershing Square Holdings (PSH)'s Bill Ackman wrote a letter to investors outlining his insight on the coronavirus pandemic in the United States. He revealed that PSH completed the process of exiting the hedges on 23 March, netting a gross $2.1bn for PSH, after turning 'increasingly positive on equit

  3. New Launches: LGPS Central sets up investment grade bond fund, Leeds Equity Advisors aims to raise $1bn for PE fund, RLI Investors to launch European last-mile logistics fund, DBL Partners IV targets $450m[more]

    LGPS Central sets up investment grade bond fund From IPE: LGPS Central, the asset pooling vehicle for eight local government pension schemes (LGPS) based in England's Midlands, has launched a global investment grade corporate bond fund in order to meet its partner funds' needs. The po

  4. Investing: Marathon sees cheap assets amid dislocation in credit, Deerfield's health care buying spree, It's time to buy shares again, says BlackRock, Credit Suisse, Fed is buying credit ETFs but one hedge fund is shorting them[more]

    Marathon sees cheap assets amid dislocation in credit From Bloomberg: Distressed-investment specialist Marathon Asset Management is buying beaten-up debt amid the greatest dislocation in credit markets since 2008, according to Bruce Richards, co-founder and chief investment officer of the

  5. People: Carlyle picks 2 deputy heads for Japan buyout advisory team, Ex-Kleinwort Hambros adviser takes senior role at multi-family office boutique[more]

    Carlyle picks 2 deputy heads for Japan buyout advisory team From Takaomi Tomioka and Hiroyuki Otsuka were named deputy heads of the Japan buyout advisory team at Carlyle Group. The positions are new, confirmed a spokeswoman for the New York-based private markets investment g