Hedge Funds Experience $9.0 Billion in Redemptions in February as Investors Respond to Late 2020 COVID-19 Surge and Accompanying Economic Fallout

Hedge fund flows reversed course in February with $9.0 billion in redemptions, following $30.5 billion in industry inflows a month earlier.

February’s redemptions represented 0.2% of industry assets, according to the Barclay Fund Flow Indicator published by BarclayHedge, a division of Backstop Solutions.

A $42.8 billion monthly trading profit brought total hedge fund industry assets to nearly $4.03 trillion as February ended.

Despite the month’s industrywide trend, most hedge fund sectors actually experienced net inflows in February, with data from 6,900 funds (excluding CTAs) in the BarclayHedge database showing Fixed Income funds setting the pace with $8.9 billion in inflows, while Sector Specific funds added $8.4 billion and Event Driven funds brought in $8.3 billion in new assets. But $48.2 billion in redemptions from Balanced (Stocks & Bonds) funds largely set the direction of the industry’s outflow trend in February.

“A COVID-19 surge in the final months of 2020 that saw U.S. COVID deaths and hospitalizations hit record levels in December left investors skittish,” said Sol Waksman, president of BarclayHedge. “The pandemic spike produced a variety of bad economic news, including rising U.S. jobless claims and declining retails sales as economies slowed in the U.S. and Europe as the year ended.”

Over the 12-month period through February, the hedge fund industry experienced $62.8 billion in net redemptions. A $294.5 billion trading profit over the period brought total industry assets to nearly $4.03 billion as the month ended, up from $3.91 billion at the end of January and $3.21 trillion a year earlier.

Seven hedge fund sectors posted 12-month inflows through February. Sector Specific funds set the pace bringing in $48.6 billion, 26.7% of assets, while Emerging Markets – Asia funds added $20.8 billion, 17.8% of assets, and Fixed Income funds saw $13.9 billion in inflows, 2.1% of assets.

Other sectors with 12-month inflows included Event Driven funds which added $13.0 billion over the period, 7.0% of assets, Convertible Arbitrage funds which experienced $7.1 billion in inflows, 28.9% of assets, Merger Arbitrage funds which took in $2.0 billion, 2.7% of assets, and Emerging Markets – Latin America funds which brought in nearly $377.8 million, 3.0% of assets.

Sectors with the largest 12-month redemptions included Balanced (Stocks & Bonds) funds with $48.3 billion in outflows, 12.2% of assets, Equity Long Bias funds which shed $24.9 billion, 7.2% of assets, Macro funds with $24.0 billion in redemptions, 12.5% of assets, and Equity Long/Short funds which saw $19.4 billion in outflows, 10.3% of assets.

Managed futures funds experienced a fourth consecutive month of inflows in February adding $1.7 billion in new assets. Three of four CTA sectors tracked experienced inflows for the month.

Systematic CTAs added 1.1 billion, 0.4% of assets, Discretionary CTAs brought in $512.2 million, 3.9% of assets, and Hybrid CTAs saw $94.4 million in inflows, 0.9% of assets.

The lone sector experiencing net redemptions in February was Multi Advisor Futures Funds with $15.8 million in outflows, 0.1% of assets.

For the 12-month period, CTAs experienced $633.3 million in inflows. A $3.5 billion trading profit over the period contributed to the managed futures industry’s $309.7 billion in total assets, up from $307.9 billion a year earlier.

About Backstop Solutions

Backstop’s mission is to help the institutional investment industry use time to its fullest potential. We develop technology to simplify and streamline otherwise time-consuming tasks and processes, enabling our clients to quickly and easily access, share and manage the knowledge that’s critical to their day-to-day business success. Backstop provides its industry-leading cloud-based productivity suite to investment consultants, pensions, funds of funds, family offices, endowments, foundations, private equity, hedge funds and real estate investment firms.

BarclayHedge, a division of Backstop, currently maintains data on more than 7,100 hedge funds, funds of funds and CTAs. The BarclayHedge Indices are utilized by institutional investors, brokerage firms and private banks worldwide as performance benchmarks for the hedge fund and managed futures industries.

MEDIA CONTACT:

Sol Waksman

BarclayHedge