News & Events

Asset Flows Update

Introduction

Hedge funds resumed their upward climb for the year, with the Eurekahedge Hedge Fund Index gaining 1.40%1, underperforming underlying markets as the MSCI World Index2 climbed 2.34% after bouncing back from October’s major selloff. In the US, better-than-expected unemployment and third quarter GDP figures have supported equities higher and lent additional credence to the country’s recovery. Central banks worldwide remain accommodative, with the Bank of Japan (BoJ) and European Central Bank continuing to combat deflation while the People’s Bank of China also recently lowered interest rates to bolster flagging economic growth.

Final asset flow figures for October revealed that managers reported performance-based losses of US$1.6 billion while recording net asset outflows of US$12.2 billion. Preliminary data for November shows that managers have posted performance-based gains of US$19.6 billion while recording net outflows of US$7.4 billion, bringing the current AUM of the global hedge fund industry to a total of US$2.13 trillion - close to the record US$2.14 trillion reported last quarter.

Figure 1: Summary monthly asset flow data since January 2011
 

Key highlights for October 2014:

  • Hedge funds are up 4.62% year-to-date, and based on preliminary returns reported by funds with daily liquidity, we expect the index to be broadly flat in December and finish in the 4% to 5% range for 2014.
  • The total AUM of the industry grew by US$117 billion in 2014 - well below the levels seen in 2013 when industry assets grew by US$240 billion.
  • Net asset inflows for the year stand at US$40.8 billion, one-third of the inflows recorded in 2013. Inflows for 1H 2014 stood at US$75.8 billion while 2H 2014 has seen net outflows of US$35 billion.
  • Asia ex-Japan investing funds have delivered the best returns globally and are up 8.54% for the year, outperforming the MSCI Asia ex Japan by over 400 basis points.
  • CTA/managed futures funds have reported performance-based gains of US$18.7 billion for the year which is their highest November year-to-date gain since 2008, with North American CTAs leading with year-to-date returns of 9.22%.
  • India investing hedge funds reported their tenth consecutive month of positive returns with managers deploying long/short equities strategy up 54.44% year-to-date – outperforming the BSE Sensex by almost 20%.
  • European managers continue to face headwinds, generating only 1.21% of returns for the year. They have reported strong investor withdrawals of US$14.8 billion in the second half of 2014, their highest 2H withdrawals since 2011 when investors redeemed US$38.3 billion. For details please refer to the 2014 Key Trends in European Hedge Funds Report.

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Footnote
1 Based on 51.45% of funds which have reported November 2014 returns as at 12 December 2014
2 MSCI AC World Index (Local)
 
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