Hedge funds "seem to have lost their touch in the stock market," said TribTabs founder and CEO Charles Biderman, commenting on the industry's lacklustre August performance.
“We cannot help noting that while the S&P 500 rose 15.4% from September 2011 to August 2012, the best stock-based hedge fund strategy, equity long bias, produced a meager 2.0% return," said Biderman, referring to the latest data from BarclayHedge and TrimTabs.
Hedge funds took in $5.1 billion in August, but the overall trend for 2012 has been in the other direction, with assets down 28.7% from their June 2008 peak, according to BarclayHedge and TrimTabs. Total hedge fund industry assets stood at $1.7 trillion in August.
“The inflows we saw in August could not mask the profound troubles facing the hedge fund industry this year,” said Sol Waksman, founder and president of BarclayHedge. “While the industry had inflows in four of the first eight months of 2012, much stronger outflows in the other four months yielded net redemptions of $13.2 billion (2.0% of assets) year to date.”
Fixed-income funds have produced the best returns in the past 12 months, at 7.1%, and have attracted the highest inflows monthly, year-to-date, and over the past 12 months of the 13 strategies that BarclayHedge and TrimTabs track.
In regional comparison, Canadian hedge funds provided the highest returns in August, adding 2.9%, while Japan funds provided the lowest, at 0.2%.
Funds based in continental Europe had the largest inflows in August, at 0.6% of assets, while China/Hong Kong funds and Japan-based funds had the largest outflows at 0.6% of assets for each category.
Meanwhile, the September 2012 TrimTabs/BarclayHedge Survey of Hedge Fund Managers found that sentiment was evenly divided between neutral and bullish on the performance of the S&P 500 for October. Conducted in late September, the survey of 81 hedge fund managers also found that a majority expect Barack Obama to be re-elected and an even stronger majority expect control of Congress to remain divided.