Will improved performance from hedge funds in early 2019 help shift the perspectives of prospective allocators to these funds?
At the end of last year investors were seemingly nervous about stock market volatility, global economic uncertainty and major commodity price downturns – with hedge fund redemptions reaching $42.3 billion in December, according to data from BarclayHedge, a division of Backstop Solutions. This was the largest monthly outflow in five years and represented the fourth straight month of net redemptions. In total, hedge fund outflows in 2018 stood at $89.2 billion, or 3.1% of total industry assets.
This is perhaps not surprising, given that the Barclay Hedge Fund Index ended last year 5.08% down, however, are hedge funds about to turn the corner? The signs so far this year are promising. In January, the Barclay Hedge Fund Index showed returns of 3.88% while all 31 of the Barclay’s hedge fund indices ended the month with gains, and then February they extended this winning streak with returns of 1.24%.
Will this improved performance reverse the trend of hedge fund redemptions? What is the current sentiment amongst institutional allocators, wealth managers and family offices regarding hedge funds and other alternatives?
On March 27 Profit & Loss will host a panel discussion, The Investor’s Perspective: Allocation Trends in 2019 and Beyond, to address these questions and many more.
For instance, CTAs ended 2018 in negative territory according to both the Societe Generale and BarclayHedge indices and yet these funds added $6.6 billion in assets over the course of the year, increasing asset value by 1.9%. Is this an anomaly, or is there a reason why on a relative basis investors preferred CTAs over traditional hedge funds last year?
The panel discussion will be taking place as part of a broader event being hosted by Profit & Loss at Convene, 780 3rd Avenue in New York. The event will also feature panel discussions on trading opportunities in volatile markets, whether credit is being priced correctly in FX, and execution trends that are shaping the behaviour of trading firms today.