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Hedge fund industry's AUM swells to a staggering $4.32tn in June

Tuesday, August 17, 2021
Opalesque Industry Update - Investors diverted an additional $16.6 billion to hedge funds in June. The month's inflows represented 0.4% of assets and continued an inflow trend that saw $36 billion in new assets in May, $23.3 billion in April and $19.1 billion in March, according to the Barclay Fund Flow Indicator published by BarclayHedge, a division of Backstop Solutions.

A $16.8 billion June trading profit brought total hedge fund industry assets to more than $4.32 trillion.

"As positive economic trends continued, investors saw opportunity in hedge funds in June," said Ben Crawford, Head of Research at BarclayHedge. "Rallies in equity and energy markets and declining unemployment numbers through the spring months contributed to investor confidence as did economic growth in the U.S. and China and surging commodity prices as business activity accelerated."

Most hedge fund sectors added to assets in June. Fixed Income funds led the way bringing in +$8.4 billion, followed by Balanced [Stocks & Bonds] (+$4.4 billion), Multi-Strategy funds (+$2.3 billion) and Sector Specific funds (+$1.9 billion).

Just a handful of sectors experienced net redemptions in June. They included Equity Long/Short funds which shed -$2.1 billion, Event Driven funds (-$1.0 billion) and Emerging Markets - Global (-$717.4 million).

After seven consecutive months of inflows, the managed futures industry reversed course in June with -$3.1 billion in redemptions, equivalent to a loss of -0.9% of its assets. A -$1.4 billion trading loss in June brought total CTA industry assets to $339.9 billion at the end of the month.

"In contrast to Hedge Fund investors, CTA investors appeared somewhat more circumspect in June. We observed investors booking profits and trimming positions in June, breaking a seven-month run of net inflows for the managed futures industry," remarked Crawford. "Whether it was news of the astonishingly-contagious COVID-19 'Delta variant' or the curiously persistent 'transitory' inflation figures, it appears that at least some investors received a moment's pause in June."

The four CTA sectors tracked were split between inflows and redemptions for the month. While Hybrid CTAs added +$165.3 million (+0.9% of assets) and Multi Advisor Futures Funds were up +$63.2 million (+0.5% of assets), the much larger Systematic CTA suffered net outflows of -$3.1 billion (-1.0% of assets) and Discretionary CTAs gave up -$131.7 million (-0.5% of assets).

12-month flow trends

For the trailing 12 months ending in June, the hedge fund industry experienced $148.8 billion in net inflows. A $459.2 billion trading profit over the same period brought total industry assets to the $4.32 trillion figure, up from $4.27 trillion in May and $3.11 trillion a year earlier.

Most hedge fund sectors continued to post 12-month inflows with 11 sectors adding to their war chests through June. Fixed Income funds were the sector leader bringing in +$73.6 billion (+10.5% of assets), while Sector Specific funds added +$55.8 billion (+27.9% of assets), and Emerging Markets - Asia funds saw +$28.8 billion in inflows, and increase of +25.2% of assets.

Others sectors adding to assets over the 12 months included Multi-Strategy funds with +$20.0 billion (+5.8% of assets), Event Driven funds +$19.5 billion (+11.1% of assets), and Merger Arbitrage funds $8.2 billion (+10.4% of assets).

Hedge fund sectors with the largest 12-month outflows included Balanced (Stocks & Bonds) funds with $31.9 billion (-8.2% of assets), Equity Long Bias funds -$16.7 billion (-5.3% of assets), Macro funds -$16.0 billion (-9.2% of assets), Equity Long/Short funds -$8.4 billion (-5.1% of assets), and Equity Market Neutral funds down -$6.9 billion (-10.8% of assets)

Over the trailing 12 months ending in June, the managed futures industry saw $21.1 billion in net inflows. A $21.8 billion trading profit over the period brought total industry assets to the $339.9 billion figure at the end of June, up from $283.1 billion a year earlier.

All four CTA sectors tracked reported 12-month inflows through June. Systematic CTAs were up +$16.6 billion (+6.3% of assets), Discretionary CTAs +$2.7 billion (+24.3% of assets), Hybrid CTAs +$1.8 billion (+21.4% of assets) and Multi Advisor Futures Funds +$114.0 million (+1.1% of assets).

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