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A $124.13 billion trading profit during the month brought total hedge fund industry assets to more than $4.99 trillion as July ended.

"Throughout July major equity markets continued the uptrend that got started in June. This helped to buoy trading profits and spirits in many sectors of the hedge fund industry. While July redemptions continued to exceed subscriptions across the industry, the pace in July slowed noticeably as compared to the previous four months'," said Ben Crawford, Head of Research at BarclayHedge.

"However, considering the gathering macroeconomic thunderheads, the respite for hedge funds looks tenuous at best. The IMF's July update was titled 'Gloomy and More Uncertain' and its report lived up to the headline, telling of economic indicators pointing toward sharp downturns around the globe."

Net redemptions were the norm across most hedge fund subsectors in July. Those bucking the trend were led by Multi-Strategy funds, which were up $4.49 billion (+0.66% of industry assets). Other strategies picking up investor dollars included Convertible Arbitrage funds $1.40 billion (+3.84% of industry assets); Emerging Markets - Asia funds $0.93 billion (+0.59% of industry assets); Sector Specific funds +$0.86 billion (+0.18% of industry assets); and Option Strategies funds +$0.19 billion (+0.36% of industry assets).

Among those reporting net outflows in July, Fixed Income funds saw the greatest monetary flight with -$6.70 billion in outflows (-0.73% of assets). Following Fixed Income managers' woes were Balanced (Stocks & Bonds) funds -$5.44 billion (-0.71% of industry assets); Equity Long-Only funds -$4.21 billion (-1.19% of industry assets); Emerging Markets - Global funds -$2.35 billion (-0.98% of industry assets); Equity Long Bias funds -$1.89 billion (-0.59% of industry assets); Equity Market Neutral funds -$1.65 billion (-2.94% of industry assets); Equity Long/Short funds -$1.56 billion (-0.96% of industry assets); and Macro funds -$0.65 billion (-0.33% of industry assets).

The managed futures industry posted a second consecutive month of net redemptions in July with -$4.95 billion in outflows. Nevertheless, two of four CTA subsectors tracked showed net inflows in July: Discretionary CTAs added $486.45 million, (+2.07% of assets) while Multi Advisor Futures funds saw $53.07 million in inflows (+0.28% of assets).

On the redemption side of the ledger, Systematic CTAs saw -$5.23 billion in outflows, (-1.49% of assets), while Hybrid CTAs experienced -$214.86 million in redemptions (-0.93% of assets).

12-Month Flow Trends

For the 12 months through July, the hedge fund industry experienced -$70.17 billion in net redemptions. A -$331.20 billion trading loss over the period brought total industry assets under management to $4.99 trillion as July ended, up from $4.87 trillion at the end of June and up from $4.52 trillion a year earlier.

Multi-Strategy funds remained the 12-month inflow leader through July, increasing inflows over the period to $41.57 billion, (+9.11% of assets). Other subsectors with coffers swelling from the last twelve months included Merger Arbitrage funds $12.24 billion (+14.05% of industry assets); Sector Specific funds $10.58 billion (+2.96% of industry assets); Convertible Arbitrage funds $5.76 billion (+17.92% of industry assets); and Option Strategies funds $3.05 billion (+6.65% of industry assets).

More than half of the Hedge fund subsectors tracked by BarclayHedge have seen investor redemptions swamp subscriptions by a billion dollars or more during the trailing twelve-month period. Of these, the largest five have suffered a flight of more than ten billion dollars, including Fixed Income funds which are down -$58.37 billion (-6.13% of industry assets). Others in this unhappy mélange include Emerging Markets - Global funds -$21.09 billion (-10.56% of industry assets); Macro funds -$13.60 billion (-6.59% of industry assets); Balanced (Stocks & Bonds) funds -$12.51 billion (-1.99% of industry assets); and Equity Long Bias funds -$11.91 billion (-3.26% of industry assets).

Over the 12 months through July, the managed futures industry experienced -$947.08 million in net redemptions. A $41.54 billion trading profit and new entrants over the period contributed to $392.42 billion in total industry assets at the end of the month, up from $339.94 billion a year earlier.

Over the 12-month period through July, three of the four managed futures subsectors posted net inflows. Discretionary CTAs added $5.48 billion (+35.03% of assets), Multi Advisor Futures Funds saw $2.61 billion in inflows (+20.70% of assets), and Hybrid funds brought in $1.02 billion (+5.53% of assets).

Posting 12-month outflows were Systematic CTAs with -$7.52 billion in redemptions (-2.42% of assets).

Press release
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