BarclayHedge and TrimTabs Investment Research have reported that hedge funds had their biggest outflow of 2013 in December, redeeming US$10.4 billion (0.5% of assets).

Sol Waksman, president and founder of BarclayHedge, said: "The hedge fund industry took in a three-year high of $56.5 billion in 2013, a strong turnaround from 2012, when the industry shed $28.9 billion.

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"Industry assets climbed to a five-year high of $2.2 trillion in December from $2.1 trillion in November, according to estimates based on data from 3,372 funds. Assets rose 19.9% last year but were down 11.6% from the all-time high of $2.4 trillion in June 2008."

The monthly TrimTabs/BarclayHedge Hedge Fund Flow Report noted that the hedge fund industry gained 1.1% in December, underperforming the S&P 500, which gained 2.5%. For the year, the industry returned 11.3%, while the S&P 500 gained 32.4%.

Funds of hedge funds redeemed US$6.8 billion (1.4% of assets) in December, reversing November’s inflow of US$1.9 billion.

Waksman added: "Redemptions from funds of funds slowed to $35.3 billion last year from $42.9 billion in 2012."

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The monthly TrimTabs/BarclayHedge Survey of Hedge Fund Managers finds bearishness on the S&P 500 over the next 30 days is at a five-month high, while bullishness is at a five-month low.

Half of respondents expect equities to outperform bonds and precious metals over the next six months, a notable downturn in the past month. Sentiment on developed markets hit an all-time high, while the outlook for emerging markets sank to a record low.