SINGAPORE (AUGUST 18, 2015) – Eurekahedge, a market leading alternative fund data
provider and research house, together with Chicago Board Options Exchange (CBOE), the largest U.S.
options exchange and home of the widely followed CBOE Volatility Index® (VIX® Index), announced
today the launch of the "CBOE Eurekahedge Volatility Indexes," a collection of four
new benchmark indices measuring the performance of hedge funds employing volatility-based investment
The August 2015 Eurekahedge Report contains qualitative and quantitative analyses on the industry's assets flows and performance over the past month, with a special feature on key trends in global hedge funds.
The Eurekahedge Hedge Fund Index rebounded this month, up 0.27% in July 2015, while the MSCI World Index was up 1.34%. Returns for Asia ex-Japan were dented this month, down 2.60% as the end of the Chinese equity market euphoria has depressed gains for hedge funds with Greater China exposure. However, European, North American and Japanese equity markets have bounced back from losses in the previous month with developed market hedge fund mandates posting good gains.
Hedge funds bounced into recovery this month - gaining 0.27%, though still underperforming underlying markets as the MSCI World Index gained 1.34%. Equity markets were mostly up this month with the US, European and Japanese equity markets recovering from last month’s losses, while the Chinese equity markets sell-off seemed to show signs of bottoming out following active intervention by the Chinese authorities. Asia ex-Japan suffered their second consecutive month of losses, down 2.60% as its heavyweight Greater China funds were down 8.49%.
The global hedge fund industry has seen a steady increase in its asset growth after experiencing uninterrupted redemption pressure in the second half of 2014, with asset growth totalling US$93.0 billion for the first half of 2015. Much of this growth is attributed to excellent performance-based gains which account for US$51.7 billion, together with continued investor inflows accounting for US$41.3 billion.
On 17 July 2015, the Inland Revenue (Amendment) (No.2) Ordinance 2015 (Amendment Ordinance) was published in the Gazette. The Amendment Ordinance, which takes effect retrospectively from 1 April 2015, extends the existing profits tax exemption benefiting non-residents (offshore funds) to effectively allow offshore private equity funds to take advantage of the exemption.
Several years ago, around 2008, the writer was asked by industry commentators whether the classic Sukuk structures common in the market would finally evolve from ‘asset-based’ structures to ‘asset-backed’ structures that were true securitisations and thus limited in recourse solely to the performance of the assets underpinning them. At the time, this writer thought that such progress was inevitable, particularly given that the move to asset-backed would follow more closely the concepts that were promulgated by the scholars when structuring Shariah compliant issues. Flash-forward to 2015, the industry has not moved on very much from the asset-based structures still dominating the market and asset-backed structures are very few and far between. This raises the fundamental question why such asset-backed structures are still very much a minority and also why the industry has not evolved notwithstanding the continued pressure from scholars to do so.
On July 23, 2015, the Internal Revenue Service (IRS) issued long-awaited proposed regulations discussing the taxation of management fee arrangements commonly used by private equity funds and their management. The proposed regulations address the tax treatment of disguised payments for services under Section 707(a)(2)(A) of the Internal Revenue Code (the Code) where a partner has rendered services to a partnership in a capacity as other than a partner. By specifically classifying certain fee arrangements, including particular carried interest mechanisms, as disguised payments for services, the proposed regulations target purportedly abusive situations where private equity funds use management fee waivers to convert services income, taxable at the ordinary rates, into income items meriting capital gain treatment.