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A $71.03 billion trading profit during the month brought total hedge fund industry assets to more than $4.74 trillion as October ended.

Despite an overwhelmingly profitable month of trading, all but one hedge fund subsector suffered net redemptions in October 2022. Emerging Markets - Latin America represented the only aberration, attracting $1.09 billion in net new capital.

Proportionally speaking, the hardest hit subsectors in October were Emerging Markets- Asia, Global Macro-, Event Driven-, and Fixed Income funds. Emerging Market managers in Asia were waylaid by both trading losses and investor flight. All told -$6.86 billion in investor capital had fled, reducing the subsector's assets by 4.55%. Global Macro programs booked in excess of $2.27 billion in October trading profits, but the gains weren't enough to stem -$3.20 billion worth of net redemptions on the month. Total subsector AUM sagged by -1.65% under the weight of the outflows. The story was similar amongst Event Driven managers: October training profits topped $5.30 billion, but were swamped by investors headed for the exits.

Net redemptions totaled -$4.05 billion for a reduction in subsector AUM worth -1.61%. Net outflows for Fixed Income hedge fund managers was proportionally similar (-1.57%), but due to the subsector's large relative size, the total outflow figure was much higher at -$13.88 billion.

Material nominal net outflows were also recorded amongst Balanced (Stocks & Bonds) funds which saw -$5.93 billion exit (-0.81% of assets); Sector Specific funds experienced -$4.77 billion in redemptions (-1.06% of assets); and Equity Long Bias funds shed -$4.35 billion (-1.46% of assets).

October's regional flow trends showed that capital outflow was broad-based across geographies. Latin America was the lone region experiencing inflows bringing in $1.15 billion (+11.67% of assets). The month was particularly difficult for managers in Asia. Hedge fund managers in China/Hong Kong and Japan were each subject to net redemptions amounting to more than 3% of their regions' AUM. Net redemptions sapped -3.57% of the regional AUM from Japan and -3.14% from China- and Hong Kong-based managers.

Elsewhere, the largest nominal outflows were seen in the U.S. and its offshore islands where hedge funds saw -$26.45 billion exit (-0.97% of assets). The second and third largest hedge fund geographies suffered somewhat smaller nominal outflows that were, nevertheless, significantly more painful proportional losses: Continental Europe saw net redemptions of -$21.97 billion (-1.86% of assets) and the U.K. and its offshore islands had -$9.66 billion in outflows, equivalent to a -2.14% loss of assets.

The managed futures industry suffered a fifth consecutive month of net redemption activity with -$4.21 billion in outflows (-1.04% of assets). The string of losses dates back to June 2022 and has cost the managed futures industry a combined -$17.68 billion in capital. Nevertheless, steady profits (and sometimes glittering profits) throughout the year combined with the inertia of new fund starts have buoyed our model's projection of industry's global AUM, which peaked in September 2022 just under $405 billion. Slowing new starts, trading losses and investor redemptions in October depressed CTAs' global AUM down about -1.70% to $398 billion.

As in the prior four months, the four CTA subsectors tracked were once again evenly split between those enjoying net inflows and those suffering net redemptions. Discretionary and Multi-Advisor Future Funds both picked up new investment capital (+1.13% and +1.20%, respectively) while Systematic- and Hybrid-CTAs lost investor capital (-1.21% and -0.73%, respectively). In the end, Systematic CTAs, by far the largest subsector, tipped the industry balance for the month with -$4.38 billion in net outflows.

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