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Hedge funds see $2.8b in redemptions in September, snapping three-month inflow streak

Monday, November 23, 2020
Opalesque Industry Update - Hedge fund industry flows reversed course in September 2020 as the industry's $2.8 billion in redemptions ended a three-month inflow trend. The industry had brought in $5.6 billion in new assets in August.

September's outflows represented 0.1% of industry assets, according to the Barclay Fund Flow Indicator published by BarclayHedge, a division of Backstop Solutions.

With the addition of a $15.6 billion trading loss in September, total hedge fund industry assets stood at more than $3.38 trillion as the month ended, up from $3.36 trillion at the end of August.

Data from 6,900 funds (excluding CTAs) in the BarclayHedge database showed Sector Specific funds leading the way in September, bringing in $2.3 billion, while Emerging Markets - Global funds added $1.6 billion.

"COVID-19 case numbers spiked in many regions and countries over the summer, while week after week brought reports of more than a million U.S. workers filing first-time unemployment claims," said Sol Waksman, president of BarclayHedge. "Couple that with a Fed warning that the surging pandemic was beginning to hurt economic recovery and other indicators like a downward revision in oil demand forecasts and many hedge fund investors decided to look elsewhere in September."

Over the 12-month period through September, the hedge fund industry experienced $122.2 billion in redemptions. A $60.4 billion trading profit over the period contributed to the total industry assets of more than $3.38 trillion at the end of the month, up from $3.05 trillion a year earlier.

Six hedge fund sectors posted 12-month inflows through September. Sector Specific funds led the way with $25.8 billion in 12-month inflows, 15.1% of assets, followed by Event Driven funds with $9.0 billion, 5.3% of assets, Convertible Arbitrage funds with $3.7 billion, 17.9% of assets, Balanced (Stocks & Bonds) funds with $3.1 billion, 1.0% of assets, and Emerging Markets - Latin America funds with $736.1 million, 6.5% of assets. New to the group in September was Emerging Markets - Asia funds, adding $461.8 million, 0.4% of assets.

Hedge fund sectors with the largest 12-month redemptions included Fixed Income funds shedding $34.7 billion, 5.4% of assets, Equity Long/Short funds with $31.0 billion in redemptions, 15.8% of assets, Equity Long Bias funds experiencing $19.3 billion in outflows, 5.7% of assets, and Macro funds shedding $18.0 billion, 9.2% of assets.

Managed futures funds saw a third consecutive month of industry inflows in September, bringing in $1.0 billion in new assets with two of four sectors tracked - Systematic CTAs ($918.0 million, 0.3% of assets) and Discretionary CTAs ($124.7 million, 1.1% of assets) - adding to assets for the month. The industry experienced a $3.0 billion trading loss for the month, taking total industry assets to $303.6 billion as September ended, down from $304.9 billion in August.

For the 12-months through September, CTAs experienced $5.4 billion in redemptions, 1.7% of assets. A $16.0 billion trading loss over the period contributed to the $303.6 billion industry asset total at the end of September, down from $308.4 billion a year earlier.

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