Hedge fund assets under management grew by US$34.1 billion through December as managers ended 2010 on a high note. The Eurekahedge Hedge Fund Index posted a strong return of 3.01%1 in the month, bringing the yearly return to 10.93%. This marks an outperformance to underlying markets in the yearly return measure as the MSCI World Index2 delivered a 7.83% return for the year.
The total assets in the hedge fund industry reached US$1.67 trillion as the funds posted significant profits and attracted significant capital in December. Performance-based gains accounted for US$26 billion as managers delivered substantial gains on the back of resurgent markets. The sector witnessed net positive asset flows to the tune of US$8.11 billion. Although December is usually a relatively slow month for inflows, the heightened market sentiment led to greater than normal inflows last month.
Figure 1 shows the monthly asset flows across the hedge fund industry since December 2008.
Figure 1: Summary monthly asset flow data since December 2008
Highlights for the month of December:
- Hedge funds posted double-digit growth in 2010, up 10.93%, and outperformed underlying markets by 3.10%.
- The global hedge fund industry grew by US$34.1 billion – total asset growth for the year stood at US$186.6 billion.
- Total assets in the industry reach US$1.67 trillion – on track to cross the historical high of US$1.95 trillion by end of 2011.
- North America was the best performing hedge fund region in 2010, up 13.33% for the year and assets in North American hedge funds crossed US$1.1 trillion (67% of the total industry) for the first time since September 2008.
- Japanese hedge funds posted their best annual returns in 5 years, up 8.43% in 2010, and crossed US$15 billion for the first time since...
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1 Based on 58.32% of the funds reporting their NAV for December 2010 as of 14 January 2011.
2 MSCI The World Index Free – Local Currency