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New entrants push global hedge fund industry over $5tn

Thursday, April 28, 2022
Opalesque Industry Update - The hedge fund industry turned back to outflows in February, experiencing -$3.19 billion in net redemptions, -0.07% of industry assets, according to the Barclay Fund Flow Indicator published by BarclayHedge, a division of Backstop Solutions. Despite the trading losses and redemptions, data coming in from newly added funds led our models to show an increase in hedge fund industry assets to $5.04 trillion.

"Hedge fund subsector flows were an evenly mixed bag in February, with outflows slightly edging out inflows overall. The most significant interest was seen amongst Multi-Strategy hedge funds, which picked up an additional $10 billion. The largest areas of flight were observed among Fixed Income and UCITS funds, which shed more than $8 billion each," noted Ben Crawford, Head of Research at BarclayHedge. "The action this month was in the realm of managed futures funds, which enjoyed a rising tide of inflows and rode strong performance tailwinds."

Subsectors reporting inflows in February included Multi-Strategy funds bringing in $10.11 billion; Convertible Arbitrage funds attracting $2.57 billion; Emerging Markets - Global funds adding $2.03 billion; Merger Arbitrage funds with $1.57 billion in inflows; and Sector Specific funds adding $1.18 billion. In proportional terms, the largest uptake was in Convertible Arbitrage funds (+7.25%) followed by Multi-Strategy funds (+1.99%) and Merger Arbitrage funds (+1.65%).

Subsectors contributing most significantly to hedge fund net redemptions included Fixed Income funds shedding -$8.30 billion; Balanced (Stocks & Bonds) funds with -$3.47 billion in outflows; Equity Long Bias funds with -$2.75 billion in redemptions; Emerging Markets - Asia funds seeing -$2.15 billion exit; and Event Driven funds with -$1.98 billion in redemptions. Proportionally speaking, outflows loomed largest for Emerging Market - Latin America funds (-1.28%); Emerging Market - Asia funds (-1.10%); and Fixed Income funds (-0.82%).

The managed futures industry reversed a three-month string of redemptions with $2.93 billion in inflows in February. All four CTA subsectors posted net inflows. Systematic CTAs brought in $2.15 billion (+0.67% of assets); Discretionary CTAs added $495.59 million (+2.77% of assets); Hybrid CTAs saw $282.10 million in inflows (+1.57% of assets); and Multi-Advisor Futures Funds attracted $199.34 million (+0.30% of assets).

12-Month Flow Trends

For the 12 months through February, the hedge fund industry experienced $187.30 billion in inflows. Multi-Strategy funds led a group of 14 hedge fund subsectors recording 12-month inflows through February adding $50.13 billion (+12.72% of assets), over the period.

Other subsectors with notable 12-month inflows included Fixed Income funds with $48.52 billion (+4.92% of assets); Sector Specific funds with $31.18 billion (+9.72% of assets); Balanced (Stocks & Bonds) funds with $23.44 billion (+4.29% of assets); Equity Long-Only funds with $16.04 billion (+7.33% of assets); and Merger Arbitrage funds with $11.98 billion (+13.19% of assets).

Hedge fund subsectors with 12-month outflows included Emerging Markets - Global funds with -$10.13 billion (-5.40% of assets); Macro funds with -$7.62 billion (-4.06% of assets); Equity Long Bias funds with -$6.87 billion (-1.93% of assets); Equity Market Neutral funds with -$2.07 billion (-3.71% of assets); and Emerging Markets - Latin America funds with -$1.48 billion (-13.53% of assets).

For the 12 months through February, three of four CTA subsectors experienced net inflows. Discretionary CTAs brought in $2.68 billion (+17.93% of assets); Hybrid CTAs added $1.85 billion (+11.45% of assets); and Multi-Advisor Futures Funds attracted $1.40 billion (+12.77% of assets).

Systematic CTAs were the lone subsector with 12-month redemptions, -$2.45 billion (-0.86% of assets).

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