Asset Flows Update


Hedge funds finished the month of July in the red with the Eurekahedge Hedge Fund Index down 0.10%1 (2.82% year-to-date), outperforming the MSCI World Index2 which declined 0.83% from rising geo-political tensions between Russia and the west, and concerns over Portugal’s banking sector weighed in on investor sentiment. Despite strong second quarter growth numbers in the US, anxiety continues to grow regarding the timing for the Fed’s abandonment of its zero-interest-rate policy following dissenting opinions on the issue in the recent FOMC meeting. Asian markets evaded the overall negative sentiment as healthy macro-economic numbers from China gave a boost to regional equity markets with Asian mandated hedge funds ending July on a strong note.

Final asset flow figures for June revealed that managers raked in performance-based gains of US$8.8 billion while recording net asset inflows of US$8.7 billion as hedge funds continued to attract strong capital allocations from investors in 2014. Preliminary data for July shows that managers have posted performance-based losses of US$5.5 billion while recording net outflows of US$4.9 billion, bringing the current assets under management (AUM) of the global hedge fund industry to a total of US$2.12 trillion.

Figure 1: Summary monthly asset flow data since January 2011

Key highlights for July 2014:

  • Investor allocations for 2014 reached US$70.9 billion despite muted hedge fund returns of 2.82% year-to-date.
  • European hedge funds attracted US$33.4 billion in net asset flows as at July 2014, up from US$29.4 billion over the same period last year.
  • Assets under management of North American hedge funds breached past the US$1.4 trillion mark, with assets growing by US$62.6 billion in 2014.
  • Long/short equity, fixed income and multi-strategy funds retained the top three slots in terms of investor allocations with US$55.5 billion, US$15.6 billion and US$10.1 billion respectively.

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1 Based on 50.87% of funds which have reported July 2014 returns as at 14 August 2014
2 MSCI AC World Index (Local)