Hedge Funds Take in $3.6 Billion in November, Reversing Surge of Redemptions in Previous Months

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Hedge Fund Managers More Optimistic on S&P 500. While Divided on Likelihood of QE3, Most Managers Think Employment Will Improve in 2012, According to BarclayHedge/TrimTabs Survey

BarclayHedge and TrimTabs Investment Research reported today that hedge funds took in an estimated $3.6 billion in November, a welcome reversal after redemptions surged to $9 billion in October and hit $2.59 billion in September. Industry assets increased to $1.71 trillion in November from $1.67 trillion in October, the first increase after five months of declines. The BarclayHedge Fund Index dipped 0.8% in November after increasing 3.5% in October. That reversal followed five consecutive monthly declines. Despite the increase, hedge fund industry assets stand close to their lowest level since January 2010.

“After months of outflows across nearly every hedge fund category, November saw outflows in only two investment styles: Emerging Markets, which shed $1.3 billion, and Equity Long-Short, which shed $1.0 billion,” says Sol Waksman, founder and President of BarclayHedge.

“November’s numbers are significantly better than October’s, when only five out of the 14 strategies we track showed any inflow and the rest were in the red,” said Leon Mirochnik, analyst at TrimTabs. Heaviest inflows for November were Multi-Strategy at $1.5 billion (5.75% of assets) and Macro at $981 million (8.5% of assets).

Meanwhile, The latest TrimTabs/BarclayHedge Survey of Hedge Fund Managers reveals growing numbers of fund managers are becoming more bullish and less bearish on U.S. equities. Bullish sentiment on the S&P 500 stands at 42% in December, the second-highest reading this year. Bearish sentiment dropped to 30%, the lowest reading since July 2011, from 36% in November. Managers were markedly bullish in only three months of 2011: January, July, and December.

The survey of 101 hedge fund managers also reveals that the managers are divided on whether the Fed will begin another round of quantitative easing in 2012. Most believe unemployment will be below 8.5% by the end of the year, and they expect value investing to be more profitable than growth investing. While a third expect gold to be the best-performing commodity of 2012, more than half expect oil or natural gas to come out on top.