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Hedge Funds Experience $30.5 Billion in January Inflows as Investors Respond to Growing Optimism About the Pace of Economic Recovery

Written by Admin | Mar 29, 2021 4:02:39 PM

The hedge fund industry started 2021 strong with $30.5 billion in inflows, following a December with nearly balanced flow activity that saw $42.6 million in redemptions.

January’s inflows represented 0.8% of industry assets, according to the Barclay Fund Flow Indicator published by BarclayHedge, a division of Backstop Solutions.

A $9.5 billion trading profit in January brought total hedge fund industry assets to nearly $3.91 trillion as the month ended.

Most hedge fund sectors brought in new assets in January, with data from 6,900 funds (excluding CTAs) in the BarclayHedge database showing Fixed Income funds leading the way in January bringing in $10.1 billion in assets while Sector Specific funds added $9.5 billion and Multi-Strategy funds saw $6.8 billion in inflows.

“Positive COVID-19 vaccine developments and growing optimism about the pace of economic recovery helped bring investors back to hedge funds in January,” said Sol Waksman, president of BarclayHedge. “Equity markets enjoyed a historic November rally before ending 2020 at record levels as business activity increased and expectations grew for additional government stimulus.”

For the 12 months through January the hedge fund industry experienced $62.0 billion in net redemptions. A $193.8 billion trading profit over the period brought total industry assets to $3.91 billion as January closed, up from $3.83 trillion at the end of December and up from $3.26 trillion a year earlier.

The number of hedge fund sectors experiencing 12-month inflows grew to seven in January. Sector Specific funds set the pace over the period adding $42.7 billion, 22.7% of assets, while Emerging Markets – Asia funds brought in $15.1 billion, 12.6% of assets, Convertible Arbitrage funds took in $6.2 billion, 27.5% of assets, and Event Driven funds saw $4.3 billion in inflows, 2.4% of assets.

Other funds with 12-month inflows included Fixed Income funds bringing in $3.8 billion, 0.6% of assets, Emerging Markets – Latin America funds with $382.7 million in inflows, 2.9% of assets, and Merger Arbitrage funds adding $290.4 million, 0.4% of assets.

Among the sectors with the largest 12-month redemptions were Macro Funds with $24.2 billion in outflows, 12.2% of assets, Equity Long/Short funds shedding $22.4 billion, 11.5% of assets, Equity Long Bias funds with $22.1 billion in redemptions, 6.2% of assets, and Multi-Strategy funds with $15.7 billion in outflows, 4.2% of assets.

The managed futures industry posted a third consecutive month of inflows in January bringing in $2.4 billion in new assets. Three of four CTA sectors tracked experienced inflows for the month.

Systematic CTAs brought in $1.6 billion, 0.6% of assets, Discretionary CTAs added $446.5 million, 3,5% of assets, and Hybrid CTAs saw $290.5 million in inflows, 3.0% of assets.

Multi Advisor Futures Funds were the lone CTA sector experiencing net redemptions in January shedding $6.2 million, 0.1% of assets.

For the 12-month period, managed futures experienced $2.7 billion in redemptions. A $7.2 billion trading loss over the period contributed to the industry’s $302.7 billion in total assets, down from $315.6 billion a year earlier.