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

A $42.8 billion monthly trading profit brought total hedge fund industry assets to nearly $4.03 trillion as February ended.

Despite the month's industrywide trend, most hedge fund sectors actually experienced net inflows in February, with data from 6,900 funds (excluding CTAs) in the BarclayHedge database showing Fixed Income funds setting the pace with $8.9 billion in inflows, while Sector Specific funds added $8.4 billion and Event Driven funds brought in $8.3 billion in new assets. But $48.2 billion in redemptions from Balanced (Stocks & Bonds) funds largely set the direction of the industry's outflow trend in February.

"A COVID-19 surge in the final months of 2020 that saw U.S. COVID deaths and hospitalizations hit record levels in December left investors skittish," said Sol Waksman, president of BarclayHedge. "The pandemic spike produced a variety of bad economic news, including rising U.S. jobless claims and declining retails sales as economies slowed in the U.S. and Europe as the year ended."

Over the 12-month period through February, the hedge fund industry experienced $62.8 billion in net redemptions. A $294.5 billion trading profit over the period brought total industry assets to nearly $4.03 billion as the month ended, up from $3.91 billion at the end of January and $3.21 trillion a year earlier.

Seven hedge fund sectors posted 12-month inflows through February. Sector Specific funds set the pace bringing in $48.6 billion, 26.7% of assets, while Emerging Markets - Asia funds added $20.8 billion, 17.8% of assets, and Fixed Income funds saw $13.9 billion in inflows, 2.1% of assets.

Other sectors with 12-month inflows included Event Driven funds which added $13.0 billion over the period, 7.0% of assets, Convertible Arbitrage funds which experienced $7.1 billion in inflows, 28.9% of assets, Merger Arbitrage funds which took in $2.0 billion, 2.7% of assets, and Emerging Markets - Latin America funds which brought in nearly $377.8 million, 3.0% of assets.

Sectors with the largest 12-month redemptions included Balanced (Stocks & Bonds) funds with $48.3 billion in outflows, 12.2% of assets, Equity Long Bias funds which shed $24.9 billion, 7.2% of assets, Macro funds with $24.0 billion in redemptions, 12.5% of assets, and Equity Long/Short funds which saw $19.4 billion in outflows, 10.3% of assets.

Managed futures funds experienced a fourth consecutive month of inflows in February adding $1.7 billion in new assets. Three of four CTA sectors tracked experienced inflows for the month.

Systematic CTAs added 1.1 billion, 0.4% of assets, Discretionary CTAs brought in $512.2 million, 3.9% of assets, and Hybrid CTAs saw $94.4 million in inflows, 0.9% of assets.

The lone sector experiencing net redemptions in February was Multi Advisor Futures Funds with $15.8 million in outflows, 0.1% of assets.

For the 12-month period, CTAs experienced $633.3 million in inflows. A $3.5 billion trading profit over the period contributed to the managed futures industry's $309.7 billion in total assets, up from $307.9 billion a year earlier.