The benchmark Eurekahedge Hedge Fund Index was down 0.48% in October, while the MSCI World Index was down 1.38% over the month. Total assets under management decreased by US$11.40 billion during the month as the sector witnessed a performance-based decrease of US$3.02 billion while registering net asset outflows of US$8.38 billion. The total size of the industry now stands at US$ 2.25 trillion.
The Eurekahedge Hedge Fund Index declined 0.48% in October outperforming underlying markets as represented by the MSCI World Index which was down 1.38% over the same period. Among regional mandates, Latin American managers led the table, up 4.07% during the month followed by Japan managers who gained 2.28%. Across strategies, distressed debt hedge funds led the table with gains of 1.96% followed by fixed income hedge funds which were up 0.51%.
Hedge funds witnessed their first decline in seven months, down 0.48% in October. Despite being in the red this month, hedge funds have outperformed underlying markets, with the MSCI AC World Index (Local) losing 1.38% over the same period. While the US Presidential Elections loomed in the background, markets moved in the rhythm of a series of economic data releases as well as central bank meetings this month.
CTA/managed futures hedge fund strategies account for almost 11% of the global hedge fund assets under management (AUM), accounting for US$250.3 billion as of October 2016. While the global hedge fund industry has seen redemptions of US$16.6 billion in 2016; the highest on record since 2009, CTA/managed futures strategies have continued to attract investor capital for the second consecutive year in a row. The strategy has seen net investor allocations of US$12.2 billion in 2016, following capital inflows of US$29.0 billion in 2015. Average index returns for the strategy have been muted over the last two years (this following their strong showing in 2014 when the Eurekahedge CTA/Managed Futures Hedge Fund Index was up 9.62%), the prospect of uncorrelated returns, both to traditional and hedge fund mandates adds much to the appeal of CTA/managed futures hedge funds in an investor’s portfolio.
The US$54.9 billion Latin American hedge fund industry grew by US$0.6 billion over the past nine months. Though a modest figure, this represents the industry’s first year-to-date asset expansion since 2013. Much of this year’s asset expansion is attributed to positive performance-based figures totalling US$1.4 billion while investors redeemed US$0.8 billion from the industry.
Eurekahedge’s Latin American hedge funds infographic sums up the industry as at November 2016. Find out more about Latin American hedge funds assets under management (AUM), asset flows into strategic and regional mandates, strategy returns, fund size and geographic AUM, head office locations and the best and worst performances of the year.
David Liebowitz has been an investment professional for over 33 years. Prior to founding Aroya Capital LP, David served Bear Stearns in a number of capacities from 1983 to 2005. The common thread of his experience was his involvement in proprietary trading during his entire 22 years career at Bear – initially Risk Arbitrage and then Convertible Arbitrage for many years. Over the course of his career at Bear he managed as much as $4 billion of proprietary capital as well as $1.4 billion of client assets. In 1993 David was elected to the Board of Directors of The Bear Stearns Companies, Inc., serving as a director until 2001.
Private investments in public equity, also known as PIPEs, enable both smaller and larger companies to raise capital on a shorter timeline, and more confidentially, often with fewer transaction costs than with a traditional underwritten public offering. PIPEs, in turn, offer investors such as hedge funds and private equity investors the opportunity to tailor an investment in a public company that has both downside protections and upside rewards.
An increasing number of employers are looking at the possibility of creating investment vehicles to allow their employees to make investments in the employer corporation or a portfolio managed by the employer that will qualify for inclusion in, inter alia, registered retirement savings plans (RRSP), registered retirement income funds (RRIF), registered education savings plans (RESP) and tax-free savings accounts (TFSA) (collectively referred to hereinafter as the ‘Registered Plans’).