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The Pace of Hedge Fund Redemptions Increased To End 2019

Backstop BarclayHedge's Barclay Fund Flow Indicator suggests that $29bn was pulled from hedge funds in December 2019, 0.9% of industry assets. Trading profits of $34,7bn offset the outflows to send industry assets under management to more than $3.19trn, according to the firm.

“Investors saw the worst U.S. manufacturing month since the Great Recession coupled with a downturn in U.S. service sector activity. A continuing decline in consumer confidence over the fall months added to recession concerns,” said Sol Waksman, president of BarclayHedge. “Meanwhile, reports of China’s economic growth sinking to a 27-year low coupled with news that Hong Kong had entered a recession added to investors’ jitters.”

The managed futures industry had a better experience in December as CTAs posted $1.2 billion in inflows, 0.4% of industry assets. A $500 million trading profit in December brought total CTA industry assets to $318.4 billion as December ended, up from $310.2 billion at the end of November.

“CTAs’ performance started to pick up in the year’s final months based on strong global equity markets and rising government bond yields,” said Waksman. “With the improved performance came additional investor assets.”

December’s inflows were driven by CTAs in the U.S. and its offshore islands which added $3.9 billion, 1.9% of assets. Elsewhere in the world, redemptions were the standard in December, led by CTAs in Continental Europe which experienced $1.6 billion in outflows, 4.5% of assets, and funds in the U.K. and its offshore islands which saw $983.0 million in redemptions, 1.7% of assets.

Over the course of 2019, CTA funds experienced $15.9 billion in outflows, 4.5% of industry assets. A $13.1 billion trading profit over the 12-month period contributed to the managed futures industry’s $318.4 billion in total assets at the end of December, down from $355.1 billion a year earlier.

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