Hedge funds take in USD3.6bn in November

Date: Thursday, January 5, 2012
Author: Wendy Chothia, HedgeWeek

Hedge funds took in an estimated USD3.6 billion in November, according to BarclayHedge and TrimTabs Investment Research, a welcome reversal after redemptions surged to USD9 billion in October and hit USD2.59 billion in September.

Industry assets increased to USD1.71 trillion in November from USD1.67 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 USD1.3 billion, and Equity Long-Short, which shed USD1.0 billion,” says Sol Waksman (pictured), 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 USD1.5 billion (5.75% of assets) and Macro at USD981 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 US 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.