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May 2010 Asset Flows Update

Hedge funds had a mixed month in May, witnessing widespread losses due to performance while also attracting significant capital. The Eurekahedge Hedge Fund Index was down 2.33% in what was the worst month for the industry since October 2008. The sector, however, outperformed the underlying markets significantly as the MSCI World Index slid 9.91% during the month.

Furthermore, hedge fund managers attracted significant capital in May as investors took into account the strong performance of the sector in the first four months of the year. Performance-based losses of US$16.68 billion were partially countered by the net inflows of US$5.44 billion, making it the fourth consecutive month of net inflows.

Hedge funds also continue to remain in positive territory when considering year-to-date performance, with the average hedge fund up 0.78% May year-to-date. Although this is the worst May year-to-date returns of the index since its inception, it still shows hedge funds to be ahead of global markets, which are down 7.64% for the year – an outperformance of 8.42%.

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

Click on the image for an enlarged preview


Below are the highlights for the month of May:

  • North American hedge funds saw four consecutive months of positive net asset flows, attracting US$25 billion since February 2010.
  • Hedge funds were down 2.33% in May 2010 but have outperformed global equity markets by 8.42% YTD.
  • Japan is the best performing region so far in the year, up 3.72% YTD.
  • UCITS III hedge funds attracted US$5 billion capital in the first five months of the year.

In terms of regional mandates, North American managers continued to witness net inflows for the fourth consecutive month. The regional managers have attracted…

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