17/04/20

HEDGE FUNDS: Hit with $66bn losses in February.

As published on investmentweek.co.uk, Friday 17 April, 2020.

The global hedge fund industry saw total assets fall by $66bn in February, following $57.9bn of trading losses for the month and a year of large-scale redemptions, BarclayHedge data reveals.

The Barclay Fund Flow Indicator for the month, published on Thursday (17 April), shows that investors pulled $8.1bn from hedge funds in February, bringing net redemptions on a 12-month basis to $84.5bn.

Trading performance for the asset class on a 12-month basis was positive at $107.2bn, bringing total assets to $3.2trn.

In a volatile start to 2020 amid the economic fallout from the coronavirus pandemic hedge funds have held up well compared to global equity markets. Year-to-date, the HFRX Global Hedge Fund index, which is comprised of funds representing all main hedge fund strategies, has returned 0.6% compared to the MSCI World's losses of 10.9%, according to FE fundinfo.

BarclayHedge data also shows that hedge funds based in the UK, UK offshore jurisdictions and continental Europe drove net industry redemptions as investors pulled a total of $8.9bn from the vehicles for the month. Funds based in the US and its offshore jurisdictions meanwhile saw net inflows of $3.4bn in February.

Sol Waksman, president of BarclayHedge, explained: "Slowing economic activity in the UK and across the eurozone coupled with a downgraded projection for 2020 growth from the European Central Bank prompted investors to look for opportunities elsewhere in February.

"The picture was brighter for hedge funds in the US where stocks and corporate bonds enjoyed their best year in a decade in 2019."