Despite a broader industry trend that saw hedge fund redemptions accelerate slightly in May to -$27.53 billion (-0.54% of industry assets), some hedge fund subsectors did manage to add to assets over the month, according to the latest Barclay Fund Flow Indicator published by BarclayHedge.
• Hedge fund redemptions increased slightly in May to $27.53 billion, 0.54% of industry assets
• Despite the broader industry trend, some hedge fund subsectors did manage to add to assets in May, with multi-strategy funds leading the way at +$2.90 billion, 0.42% of assets
• The managed futures industry had a better experience, recording the fourth consecutive month of inflows (+$1.79 billion)
Despite a broader industry trend that saw hedge fund redemptions accelerate slightly in May to -$27.53 billion (-0.54% of industry assets), some hedge fund subsectors did manage to add to assets over the month, according to the latest Barclay Fund Flow Indicator published by BarclayHedge.
In dollar-terms Multi-Strategy funds led the way adding $2.90 billion while Merger Arbitrage funds brought in $812.81 million, Option Strategies funds saw $760.22 million in inflows, Convertible Arbitrage funds added $318.52 million and Equity Long/Short funds brought in $283.52 million. On a percentage basis the subsectors that fared best were Option Strategies funds (+1.39% of sector assets); Emerging Markets – Latin America funds (+1.39% of sector assets); and Convertible Arbitrage funds (+0.85% of sector assets).
Fixed Income funds suffered the most in dollar net outflows, shedding -$16.50 billion during the month.
Other subsectors seeing significant outflows in May included Emerging Markets – Asia funds with -$5.57 billion in redemptions, Balanced (Stocks & Bonds) funds shedding -$3.54 billion, Macro funds with -$3.11 billion exiting and Equity Long Bias funds with -$1.81 billion in outflows. On a percentage basis the subsectors hardest hit were Emerging Markets – Asia (-3.25% of sector assets); Fixed Income funds (-1.70% of sector assets); Macro funds (-1.52% of sector assets); and Emerging Markets – Eastern Europe (-1.32% of sector assets).
For the fourth month in a row, the managed futures industry has had a better result, recording $1.79 billion in inflows in May, during which all four CTA subsectors saw net inflows.
All four CTA subsectors tracked indicated net inflows in May. Systematic CTAs brought in $907.81 million (+0.26% of assets); Multi-Advisor Futures Funds added $794.77 million (+4.83% of assets); Discretionary funds saw $588.12 million in inflows (+2.79% of assets); and Hybrid funds added $294.10 million, (+1.42% of assets).
For the 12 months through May, the global hedge fund industry experienced $23.68 billion in inflows. A $258.08 trading loss over the period brought total industry assets to $5.07 trillion at the end of May, up from $4.32 trillion a year earlier, but down from the $5.11 trillion seen at the end of April.
Multi-Strategy funds continued to lead hedge fund subsector pack with $43.20 billion (+9.97% subsector assets). Sector Specific funds were up a combined $19.19 billion (+5.61% subsector assets) followed by Merger Arbitrage funds which increased by $11.79 billion (+13.48% subsector assets). On a proportional basis Convertible Arbitrage funds have fared best over the past year, picking up $5.75 billion in new capital (+18.59% in assets).
Hedge fund subsectors with the largest 12-month dollar outflows were led by Fixed Income funds which have seen a combined -$23.32 billion in net redemptions (-2.55% of assets). Emerging Markets – Global funds have lost -$16.33 billion (-8.15% of assets) and Macro funds -$12.20 billion (-6.09% of assets). Percentage-wise, however, the worst declines have been seen amongst Emerging Markets – Latin America funds (-12.92% of assets) and Emerging Markets – Global funds (-8.15% of assets), followed closely by Macro funds.
Over the 12 months through May, the Managed Futures industry has seen an additional $4.02 billion in net inflows while 12-months’ cumulative trading profits of $44.60 billion elevated industry assets to the $384.41 billion, up from $339.94 billion a year earlier.
Three of the four CTA subsectors have benefited from net inflows over the trailing 12-month period with discretionary CTAs benefitting most, both in absolute and relative terms, adding $3.49 billion (+22.64% of assets) over the trailing 12 months. Multi-Advisor Futures Funds have also prospered, netting an additional $2.48 billion (+18.28% of assets). Hybrid CTAs scooped up a new $1.26 billion, swelling their capital base by +7.11% of assets.
The lone subsector experiencing 12-month redemptions through May was Systematic CTAs which saw -$795.22 million in outflows. However, it should be noted that this amounted to an asset reduction of only 25 basis points.
Key Takeaway | Managers: While capital continued to ebb from hedge funds and flow into CTAs in May, the pace of rotation into managed futures funds appears to be slowing rather than accelerating.
