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The recent news that several hedge funds are closing hasn’t stopped investors from pumping money into assets in August 2016. More than $6.3 billion in assets were added to the industry in August 2016 bringing the total assets under management to more than $3 trillion, according to finalternatives.com. The year-to-date total is -$51.8 billion, but the spike in August is a good sign for the industry, according to the eVestment Hedge Asset Flows Report. The new money that was added in August wasn’t earmarked for any one segment of the industry, but commodity funds seem to be the favorite for investors at this point. More than $2.7 billion was put in commodity funds in August.
Managed future funds are another segment of the hedge fund industry that is receiving more investment money. More than $4.7 billion was dumped into future funds in August, and that brings the 2016 total to $20.31 billion. Macro strategies are not doing very well in 2016, however. Macro strategies lost more than $3.4 billion in August, and that is the ninth straight month for that investment segment to feel the weight of redemptions. Multi-strategy hedge funds did better in August, but redemptions ruled in June and July. But inflows picked up in August. Emerging market strategies have been taking a beating in 2016 all year, and August wasn’t any better.
More than $2.6 billion has been redeemed from emerging markets in 2016, and that trend will continue thanks to China. Funds focused on China lost $33.1 million in August, and that is the lightest redemption so far in 2016. Brazil-focused funds have outperformed expectations in 2016 in spite of the political upheaval, but investors are still nervous about Brazil, and they want to reduce their exposure in that market.
The outflows in the hedge fund industry in June and July were almost as bad as the outflows that occurred during the financial crisis in 2008. Investors are still nervous thanks to a weak 2015 performance and the threat that Donald Trump may be the new president. Clinton is the choice of the hedge fund industry. If Hillary wins, the hedge fund industry will bounce back, but if Trump wins the redemptions that will take place will be unprecedented, according to some investors. Investments in emerging markets like Mexico, India, and China along with other Asian countries will suffer the most.