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A $30.68 billion trading profit during the month brought total hedge fund industry assets to $5.03 trillion as March ended.

"Hedge funds had their hands full throughout March, grappling with an abundance of potentially market-moving news stories and econometrics. Markets, on the other hand, merely shrugged," reflected Ben Crawford, Head of Research at Backstop BarclayHedge. "The burden of deciding what to bet and where to hedge in March was particularly onerous. The devil-may-care attitude of broad markets in March seems unlikely to persist, however, as issues continue to stack and the fuse burns on the U.S. debt ceiling issue."

A solid majority of hedge fund subsectors reported net redemptions in March. However, the minority group of sectors which picked up new assets was led by Event Driven funds which added +$9.12 Billion (+3.71% of sector assets).

Other beneficiaries were Convertible Arbitrage funds +$439.52 Million (+1.20% of sector assets); Option Strategies funds +$324.53 Million (+0.68% of sector assets); Equity Market Neutral funds +$258.25 Million (+0.51% of sector assets); and Distressed Securities funds +$9.32 Million (+0.07% of sector assets).

Among the hedge fund sectors that saw net divestment activity in March, the hardest hit in absolute terms was Balanced (Stocks & Bonds) funds which gave back -$5.11 Billion (-0.67% of sector assets), while the gravest blow in relative terms was absorbed by Merger Arbitrage funds which shed -$3.86 Billion (-3.39% of sector assets). Elsewhere, we noted significant net redemption activity among the following hedge fund subsectors: Multi-Strategy funds -$3.21 Billion (-0.46% of sector assets); Fixed Income funds -$3.06 Billion (-0.33% of sector assets); Equity Long-Only funds -$2.22 Billion (-0.49% of sector assets); Equity Long/Short funds -$2.11 Billion (-1.35% of sector assets); Macro funds -$2.05 Billion (-1.10% of sector assets).

The managed futures industry also struggled in March as investors redeemed -$2.33 billion more than they subscribed, a reduction of -0.64% of industry assets.

Only Discretionary CTAs managed to pick up net inflows for the month. That subsector advanced by +$152.76 Million (+0.49% of sector assets).

Asset attrition was greatest in both absolute and relative terms in the Systematic CTA sector where redemptions outweighed subscriptions by -$2.44 Billion (-0.77% of sector assets).

Redemption pressure was somewhat more attenuated amongst Multi-Advisor Futures Funds and Hybrid CTAs which lost -$77.2 Million (-0.41% of sector assets) and -$36.07 Million (-0.17% of sector assets), respectively.

12-Month Flow Trends

Over the 12-month period through March the hedge fund industry experienced -$321.23 billion in outflows. A -$187.46 billion trading loss during the period brought total industry assets to the $5.03 trillion figure as the month ended, up from $4.99 trillion at the end of February but down from $5.10 trillion a year earlier.

The count of hedge fund subsectors enjoying net subscriptions over the trailing twelve-month period has fallen to 1. Convertible Arbitrage funds remain in the black by a bit under $1 billion USD ($0.96 billion to be more exact).

The sectors which have lost the greatest proportion of their assets over the trailing twelve-month period included Equity Market Neutral funds -$6.43 Billion (-11.62% of sector assets); Macro funds -$21.88 Billion (-10.79% of sector assets); Fixed Income funds -$101.28 Billion (-10.29% of sector assets); Equity Long Bias funds -$35.21 Billion (-9.69% of sector assets); Equity Long/Short funds -$14.51 Billion (-8.60% of sector assets); and Emerging Markets - Asia funds -$15.1 Billion (-8.43% of sector assets).

For the trailing 12 months through March, the managed futures industry has bled out -$24.70 billion in redemptions for a combined reduction of assets of -6.86%. Net trading losses over this interval of -$1.25 billion contributed to the $345.92 billion industry asset figure at the end of the month, down from $380.59 billion a year earlier.

Over the trailing twelve-month period both Discretionary CTAs and Multi Advisor Futures funds remain strongly ahead.

Discretionary CTAs are up a combined +$6.08 Billion (+32.23% of sector assets), while Multi Advisor Futures funds are up +$1.95 Billion (+13.17% of sector assets).

Managed futures subsectors posting 12-month net redemptions included Systematic CTAs which are down -$30.76 Billion (-9.39% of sector assets) and Hybrid CTAs which have shrunk by -$28.79 Million (-0.14% of sector assets).