BarclayHedge reported on Tuesday that the managed futures sector has surpassed all other hedge fund strategies in assets under management at the end of the second quarter. According to the Iowa based data provider money under management in managed futures grew to $223.4 billion in the second quarter, surpassing all the other hedge fund sub sectors it lists.
It is an impressive showing for an asset class that has struggled over the last 18 months. The Barclay CTA Index was negative, -0.1%, in 2009 for only the fourth time in its 30-year history.
Different databases split up the various types of hedge fund strategies in different ways and not all managers report so the numbers should not be viewed as official though it is clear that managed futures is gaining steam at a time when overall hedge fund investment is below their historic highs. For example, BarclayHedge lists the peak for money under management in hedge funds at $2.139 trillion at the end of 2007. At the same time managed futures had $206 billion under management.
Looking inside BarclayHedge’s numbers reveals some other interesting tidbits. For instance managed futures saw one of its largest year over year increases in assets under management at the end of 2007, jumping more than 21%. This preceded one of the sectors best performing years. The Barclay CTA Index returned 14.09% in 2008. This goes counter to the assumption by many experts that managed futures overall performance is skewed by the tendency of investors to allocate money after strong performance periods that often precede drawdowns.
Managed futures saw a 30% increase in 2006 before the Barclay CTA index chalked 7.64% in 2007 and added 21% in 2007 before its 14.09% performance in 2008.Money under management in managed futures still has not returned to its peak of $234.1 billion at the end of the second quarter 2008. Assets under management peaked mostly due to performance and then dropped off as investors needed to pull liquid assets to cover huge losses in other parts of their portfolios