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Hedge funds see $5.2bn in inflows in October, reversing course from September's redemptions

Tuesday, December 22, 2020
Opalesque Industry Update - The hedge fund industry returned to monthly inflows in October, bringing in $5.2 billion in new assets for the month. The industry had experienced $2.8 billion in redemptions in September.

October's inflows represented 0.2% of industry assets, according to the Barclay Fund Flow Indicator published by BarclayHedge, a division of Backstop Solutions.

Coupled with an $11.9 billion monthly trading loss, total industry assets stood at nearly $3.41 trillion as October ended, up from $3.38 trillion at the end of September.

Data from 6,900 funds (excluding CTAs) in the BarclayHedge database showed Fixed Income funds leading the way among sectors that added to assets during the month, bringing in $3.8 billion. Sector Specific funds posted $3.5 billion in inflows.

"A number of factors began to bring investors back to hedge funds in October," said Sol Waksman, president of BarclayHedge. "The end of the shortest bear market on record, improved manufacturing data and better than expected U.S. durable goods orders aroused investor interest."

For the 12 months through October, the hedge fund industry experienced $118.8 billion in redemptions. A $33.9 billion trading profit during the period contributed to the total industry assets of $3.41 trillion as October ended, up from $3.13 trillion a year earlier.

Five hedge fund sectors posted 12-month inflows through October, led by Sector Specific funds with $25.8 billion in 12-month inflows, 15.1% of assets. Event Driven funds brought in $10.1 billion, 6.0% of assets, Convertible Arbitrage funds experienced $3.7 billion in inflows, 17.7% of assets, while Emerging Markets - Asia funds took in $2.9 billion, 2.6% of assets, and Emerging Markets - Latin America funds added $494.9 million, 4.1% of assets.

Fixed Income funds experienced the largest 12-month redemptions at $30.5 billion, 4.7% of assets, followed by Equity Long/Short funds shedding $29.5 billion, 14.5% or assets, Macro Funds with $21.0 billion in outflows, 10.8% of assets, and Equity Long Bias funds with $19.3 billion in redemptions, 5.6% of assets.

Managed futures funds reversed course on what had been a three-month inflow trend in October, experiencing $2.7 billion in redemptions, 0.9% of assets. Two of four CTA sectors tracked did add to assets in October with Discretionary CTAs bringing in $956.5 million, 8.2% of assets, while Multi-Advisor Futures Funds added $5.0 million, a negligible percentage of assets. A $521.4 million trading loss for the month brought total CTA industry assets to $298.2 billion as October ended, down from $303.6 billion at the end of September.

For the 12 months through October, managed futures funds experienced $8.9 billion in outflows, 2.9% of assets. A $13.2 billion trading loss over the period contributed to the $298.2 billion industry asset total at the end of the month, down from $305.4 billion a year earlier.

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