Hedge funds helped investors benefit from the continuing global equity market uptick in November, gaining 1.4% during a promising month that saw the S&P 500 up 5.4%. Encouragingly, hedge fund industry AuM increased after seven consecutive months of decline, climbing by $9.8bn, reducing YTD losses to $198bn. Europe ($16bn) accounted for most of the AuM increase, driven by inflows rather than performance. This was due to improving wider economic prospects. Inflation decreased slightly after a record high of 11% in October and the UK bond market stabilized under a new government. Long/short equity hedge funds continued October’s rally to post AuM growth of $19bn in November, reducing the strategy’s AuM decline to $37.5bn YTD. Macro funds posted the largest AuM decline of $4.5bn in November driven by performance decline as investors sought safe-haven assets amid rising interest rates, US-China friction and a recessionary macroeconomic environment.
Asset flows data since January 2021
Key highlights for November 2022:
- Hedge fund industry AuM
increased by $9.8bn in
November, the first positive
month since March. The
industry saw the largest net
inflows of 2022 ($9.9bn), and
performance-based losses
were minimal at $0.2bn.
- By strategy, fixed income
recorded the largest ($0.4bn)
outflows in November as record-high inflation and interest
rates in multiple geographic
regions harmed yields, making
them less attractive for allocations as a diversifier within investment portfolios. In contrast
to early 2022, long/short equity
saw inflows of $10bn and a significant uptick in performance
of $8.9bn. Investors are now
less worried about monetary
tightening from central banks
after the steep equity downturn earlier in the quarter.
- North America ($3.3bn) was
the region with the biggest
outflows as investors continued to preserve their capital
after the sharp downturn in
equity markets in September.
- YTD industry AuM decline
stood at $198bn in November
driven by $55bn of performance-based decline and
$143bn of net outflows.
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