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January 2012 Asset Flows Update

Hedge funds were down 0.23% in December as global markets continued to be volatile in the last month of 2011. The Eurekahedge Hedge Fund Index finished the year with losses of 4.15%, the second-worst return for the index since its inception in 2000. Hedge funds outperformed the underlying markets by 5.8% during the year however; the MSCI World Index1 was down 0.4% in December and 9.9% for the year.

The Mizuho-Eurekahedge Top-100 Index, which tracks the assets and performance of the largest 100 hedge funds globally, was up 1.90% in 2011 showing that larger funds performed significantly better than smaller hedge funds. Larger hedge funds also gained most of the year’s positive asset flows. The global hedge fund industry attracted US$51.2 billion during the year, with total assets under management (AuM) rising to US$1.71 trillion.

Net assets decreased in December by US$6.6 billion with net negative asset flows of US$7 billion, and performance-based growth of US$0.4 billion. Investor sentiment remained low at the end of the year, resulting in some redemptions, while portfolio rebalancing also accounted for some of the negative asset flows. Going forward this capital is expected to be reallocated in 1Q 2012 to the strategies that performed well in 2011.

Figure 1: Summary monthly asset flow data since December 2008
Monthly asset flow data since December 2008

Key highlights for December 2011:

  • Large hedge funds outperformed small hedge funds by 7.5% in 2011
  • 2011 was the second worst year on record as the Eurekahedge Hedge Fund Index was down 0.23% in December and 4.15% in 2011.

The full article is available in The Eurekahedge Report accessible to paying subscribers only.

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1MSCI AC World Index All Core – USD