Hedge Fund Industry’s June Performance Lags S&P 500; Assets Down 29.5% Since 2008 Peak. Equity-Based Funds Are Notably Low Performers Over Past 12 Months
BarclayHedge and TrimTabs Investment Research reported today that the hedge fund industry redeemed $4.9 billion (0.3% of assets) in June, compared with inflows of $1.1 billion in May. Based on data from 3,012 funds, the TrimTabs/BarclayHedge Hedge Fund Flow Report estimated that industry assets were $1.71 trillion in June, down 1.3% from $1.73 trillion in May and down 29.5% from their peak of $2.4 trillion set in June 2008.
“The hedge fund industry can’t seem to get out of the doldrums,” said Sol Waksman, founder and president of BarclayHedge. “Industry performance continues to lag popular benchmarks such as the S&P 500, and asset growth has been flat for most of the past year.”
Industry outflows totaled $32.1 billion from July 2011 to June 2012, compared with inflows of $103 billion for the previous 12 months, according to the report, while industry assets have hovered below $1.75 trillion for the past nine months.
Hedge fund industry performance was up only 0.6% in June, substantially less than the S&P 500 Index, which rose 3.96%. “The industry outperformed the S&P 500 in April and May, but June’s numbers returned to the trend we’ve seen all year,” Waksman said. “For the first six months of 2012, the industry earned a 2.4% return while the S&P 500 rose 8.3%.”
Meanwhile, funds of hedge funds continued to underperform the industry at large. In June, funds of funds redeemed $8.7 billion (1.7% of assets), the 13th monthly outflow in the past 18 months, and posted a 0.5% loss, lagging the industry’s returns by 110 basis points.
Among the major hedge fund categories, Fixed Income funds had the strongest inflows and the top performance over the past year. “Fixed Income funds were a haven, reliably turning profits and attracting inflows as one crisis after another whip-sawed financial markets around the globe,” said Charles Biderman, founder and CEO of TrimTabs. Equity-based hedge funds did not fare so well, Biderman noted.
“Investors hoping to cash in on hedge fund managers’ stock-picking skills must be disappointed,” Biderman said, noting that out of 13 major hedge fund categories, no equity-related categories showed a profit in the past 12 months, and two of the four worst-performing categories were represented by stock funds, Equity Long Bias (-6.1%) and Equity Long Only (-7.4%).
Hedge funds based in the Eurozone experienced the largest inflows (3.0% of assets) in June among eight global regions tracked by TrimTabs and BarclayHedge, a turnaround from the dominant trend of the past year, “when investors dumped European funds en masse and poured billions into Japanese funds in the hope of capitalizing on shifts in the value of the yen,” said Leon Mirochnik, Vice President at TrimTabs.
Meanwhile, the July 2012 TrimTabs/BarclayHedge Survey of Hedge Fund Managers found that fund managers were evenly divided between neutral and bearish on the S&P 500 for August. Conducted in late July, the survey of 78 hedge fund managers found that bullish sentiment on the S&P 500 dropped to an 11-month low while bearish sentiment jumped to its highest level in the past nine months.
The TrimTabs/BarclayHedge database tracks hedge fund flows on a monthly basis. The TrimTabs/BarclayHedge Hedge Fund Flow Report provides detailed analysis of these flows as well as relevant topical studies. Click here for further information.
BarclayHedge is a leading hedge fund data vendor and one of the foremost sources for proprietary research in the field of alternative investments. From its origin as a research specialist and performance measurement firm, BarclayHedge has developed complete client services as a publisher, database and software provider, and industry consultant.
TrimTabs Investment Research is the only independent research service that publishes detailed daily coverage of U.S. stock market liquidity--including mutual fund flows and exchange-traded fund flows--as well as weekly withheld income and employment tax collections. Founded by Charles Biderman, TrimTabs has provided institutional investors with trading strategies since 1990. More information here.
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