The May 2016 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 funds of hedge funds.
The Eurekahedge Hedge Fund Index gained 0.88% in April while underlying markets as represented by the MSCI World Index gained 0.67% over the same period. Among regional mandates, Latin American managers posted the best gains, up 3.93% during the month followed by North American hedge funds which saw gains of 1.25%. Across strategies, relative value hedge funds led the table with gains of 1.96% followed by event driven hedge funds which were up 1.34%.
Hedge funds outperformed underlying markets in April and were up 0.88% during the month while underlying markets as represented by the MSCI World Index gained 0.67%. Emerging market managers continued to perform well during the month supported by resilient oil and commodity prices which helped to inject some investor optimism. A confluence of factors has helped oil gain some support despite ineffective talks between OPEC members while rather encouraging Chinese macro data and stimulus measures have also aided in providing a better outlook for the Chinese economy, resulting in the climb in prices across the commodity space.
The global funds of hedge funds industry faces numerous challenges with little let down in investor redemptions since 2010 as the multi-manager model has come under scrutiny over the years. Over the past year, the industry has faced steep redemption pressure from investors witnessing US$52.7 billion in investor outflows alone. Going into 2016, the industry continues to face redemption pressure with its seventh consecutive month of investor outflows ending March 2016. As of Q1 2016, investor outflows of US$5.8 billion were recorded while performance-based losses stood at US$8.1 billion, bringing the current assets under management (AUM) for the industry to a record low of US$451.9 billion.
Eurekahedge’s funds of hedge funds infographic sums up the industry as at May 2016. Find out more about funds of hedge funds assets under management (AUM), asset flows into strategic and regional mandates, launches and closures, lifespan of active and obsolete funds, and the best and worst performances of the year.
36ONE Asset Management is an independent owner-managed specialist investment manager based in Johannesburg, South Africa. Our investment philosophy is to focus on fundamental analysis while using a macro overlay to understand which themes complement our fundamental approach and for risk management purposes with the aim of generating above-average real returns. We continually manage our investments in a flexible manner to reflect changing market conditions. Cy Jacobs shares with Eurekahedge the fund's investment strategy.
On 23 June 2016, the UK will decide in a referendum whether to remain in or to leave the European Union. Should the UK vote in favour of leaving, so-called Brexit, the UK Government will initiate a procedure leading to the UK's withdrawal from the EU and, ultimately, to the establishment of a new relationship with its former EU partners. Precisely what this will look like, and when it will come about, is uncertain and there is much debate on whether the consequences will ultimately be positive or negative for the UK. What is certain, however, is that Brexit will have a significant impact across a range of sectors - financial services, trade, employment, tax, competition and others. Asset managers, be they based in the UK, the EU or elsewhere, will be caught up in this, and will find themselves affected by Brexit, albeit to varying degrees.
Derivatives and hedging are tools that remain necessities in the financial system as a way to manage risks that might arise from uncertainties and price fluctuations in the market, although it remains a contentious subject in Islamic finance due to some of the features in the instruments that invite speculative trading. Views are often split from a Shariah standpoint, given that excessive uncertainty and speculation are concepts not permissible in Shariah compliant transactions.
The Grand Duchy of Luxembourg (Luxembourg) has been at the forefront of the financial markets’ and the structured finance’s trends and evolutions. Over the years, it grew to become a hub for securitisation and structured finance transactions with one of the world’s safest business environment, notably as a result of its financial, political and social stability and innovative approach towards the financial sector. Issuers and investors in Luxembourg benefit from strong and stable regulatory and tax frameworks, in line with European Union directives and regulations.
Family offices are increasingly popular in Asia. In addition to helping plan the vehicle structure, professional trustees can provide even more value. Family office is a term yet to acquire a definition, but generally represents a platform (sometimes a separate entity, and sometimes a unit within a family business) to deal with the financial and other matters of an ultra-high net worth family. This concept has been prevalent in the United States and Europe for some time, and is becoming increasingly popular in Asia as the number of ultra-high net worth families surge and their demand for wealth management, family planning and other related services gets more complex. Depending on the tax and regulatory environment and the actual needs of the family, a family office can be structured with different vehicles.