Hedge fund industry assets jumped to $4.07 in trillion as of the end of March, a new record high, thanks to a boom in trading profits, according to data from Iowa-based BarclayHedge. Assets under management (AUM) first topped the $4 trillion mark in February when they stood at $4.03 trillion.
That growth has come as investors pile in, encouraged by a rebounding economy (following a year of coronavirus-induced misery) and huge government spending. Over the 12-month period through March, hedge funds have made $552.1 billion in trading profits alone, while the industry’s overall AUM have swelled more than 42% during the period under review.
“Easing of lockdown restrictions, optimistic economic forecasts, rising equity and commodity prices and President Biden’s $1.9 trillion pandemic recovery plan buoyed investors’ optimism,” said Sol Waksman, president of BarclayHedge. “The last time that hedge funds had a losing month was October 2020 when the Barclay Hedge Fund Index declined -0.11%.”
Most hedge fund sectors experienced net inflows in March. Fixed Income funds attracted the most hedge fund interest, adding $6.9 billion to assets, despite the imminent threat of higher yields, which drive bond prices lower. Sector Specific funds took in $5.8 billion, Emerging Markets – Asia funds saw $5.6 billion in inflows, Event Driven funds attracted $3.0 billion and Multi-Strategy funds gathered $2.9 billion.
Notable among sectors shedding assets during the month were Emerging Markets Global funds with $3.8 billion in redemptions and Equity Long Bias funds with $3.3 billion in outflows. Macro Funds also suffered losses of $1.7 billion.
Ten hedge fund sectors experienced 12-month inflows through March. Sector Specific funds set the pace adding $54.9 billion, 32.7% of assets. Others posting inflows over the period included Fixed Income funds adding $45.5 billion, 7.6% of assets, Emerging Markets – Asia funds bringing in $30.6 billion, 30.4% of assets, Event Driven funds with $17.6 billion in inflows, 10.7% of assets, and Convertible Arbitrage funds adding $7.1 billion, 32.3% of assets.
At the opposite end of the scale, sectors with the largest 12-month redemptions included Balanced (Stocks & Bonds) funds with $44.1 billion in outflows, 12.5% of assets, Macro funds shedding $19.4 billion, 11.0% or assets, Equity Long Bias funds with $19.2 billion in redemptions, 6.4% of assets, Equity Long/Short funds with $14.9 billion in outflows, 8.4% of assets, and Equity Market Neutral funds with $9.7 billion in redemptions, 13.1% of assets.
The managed futures industry extended its inflow streak to five consecutive months bringing in $1.7 billion in new assets in March. Three of four CTA sectors experienced net inflows in March, led by Systematic CTAs which brought in $1.3 billion, 0.5% of assets. Hybrid CTAs added $447.8 million, 2.8% of assets, and Multi Advisor Futures Funds experienced $131.2 million in inflows, 1.2% of assets.
Discretionary CTAs stood alone in experiencing net redemptions in March shedding $95.7 million, 0.6% of assets.
For the 12-month period, the managed futures industry experienced $21.3 billion in inflows. A $16.1 billion trading profit over the period contributed to the $319.0 billion in total industry assets, up from $278.0 billion a year earlier.
BarclayHedge 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.