The Eurekahedge Hedge Fund Index lost 1.20% in January1 while underlying markets as represented by the MSCI World Index2 were down 5.71%. All regional mandates were down during the month as global equities faced intense sell-off pressure; much of the weakness in equity markets was led by Asian equities. Asia ex-Japan managers posted losses of 3.15% during the month followed by Japanese hedge funds which saw losses of 2.71%. Across strategies, CTA/managed futures hedge funds led the table with gains of 2.32% during the month while other strategies languished in negative territory.
Final asset flow figures for December revealed that managers reported performance-based losses of US$13.0 billion while recording net asset inflows of US$12.7 billion. Preliminary data for January shows that managers have posted performance-based losses of US$1.4 billion while recording net outflows of US$4.0 billion, bringing the current assets under management (AUM) of the global hedge fund industry to a total of US$2.24 trillion.
Figure 1a: Summary monthly asset flow data since January 2012
Key highlights for January 2016:
- Hedge funds assets under management stand at US$2.24 trillion as at end-2015 – investor inflows account for three quarters of the industry’s US$108.7 billion asset growth in 2015.
- Asian managers posted their weakest returns since August last year, with Greater China mandated funds down 5.76% in January while Japan dedicated funds lost 2.71%. The Asian hedge fund space expanded by US$10.7 billion in 2015 through a combination of investor flows and performance-based gains.
- Event driven hedge funds posted the worst returns among all hedge fund strategic mandates, down 3.56% in January. North American and European event driven managers were down 5.36% and 3.14% respectively while Asian managers posted losses of 4.65% in what is turning out to be the worst month for the strategy since 2011.
- The European hedge funds sector registered the strongest growth in AUM among all regional mandates in 2015, growing their asset base by almost 10% during the year to US$535 billion. Investor allocations to the region stood at US$ 40.5 billion, a year-on-year increase of 110%.
- CTA/managed futures, tail-risk and long volatility were the only strategies to end the month in green with returns coming in at 2.32%, 3.53% and 2.59% respectively. For more details on volatility strategies refer to the CBOE Eurekahedge Volatility Indexes.
- The US$80.9 billion Islamic funds industry managed to outperform the Dow Jones Islamic World Index in 2015 despite a very challenging market environment that saw a spike in investor redemptions as oil dependent economies in the Middle East call down capital in the face of worsening budget deficits. For more details refer to the 2015 Overview: Key Trends in Islamic Funds report.
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