Hedge funds witnessed their fourth consecutive month of positive returns as global markets ended the year on a strong note of optimism. The Eurekahedge Hedge Fund Index was up 0.98%1 during the month, bringing its 2013 returns to 8.02%. Global markets welcomed outgoing Fed chairman Ben Bernanke’s commitment to a low interest rate regime in the post-QE tapering environment with the MSCI World Index gaining 1.67%2 in December.
The industry witnessed strong growth in assets under management (AUM) during the months of October and November, with total assets rising sharply on the back of strong performance-based gains and net inflows from investors – registering a cumulative increase in AUM of US$53.9 billion. December saw some interesting results, although managers delivered their fourth consecutive month of performance-based gains (US$4.9 billion), net inflows were in the red with the industry shedding US$8.6 billion during the month. The total AUM of the industry increased by almost 13% during the year and currently stands at US$2.0 trillion.
Figure 1: Summary monthly asset flow data since January 2011
Key highlights for December 2013:
- Total assets in the hedge fund industry increased by almost 13% during the year to breach the US$2.0 trillion mark
- Hedge funds realised their best year of performance-based gains since 2010, raking in US$100 billion during the year, with long/short equities strategies accounting for almost half of this gain
- Net asset allocations to hedge funds stood at US$130 billion in 2013, with long/short equities managers witnessing net inflows of US$82.2 billion during the year
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1Based on 58.83% of funds which have reported December 2013 returns as at 16 January 2014
2 The MSCI AC World Index All Core (USD)