Research

Asset Flows Update

Introduction

The Eurekahedge Hedge Fund Index declined 0.54% in March1 outperforming underlying markets as represented by the MSCI World Index2 declined 2.21% over the same period. Among regional mandates, Latin American managers posted the best gains, up 0.81% while all other regional mandates languished into negative territory. Across strategies, distressed debt hedge funds led the table with gains of 5.74% followed by relative value hedge funds which were up 0.31%.

Final asset flow figures for February reveal that managers incurred performance-based losses of US$44.2 billion while recording net asset outflows of US$3.5 billion as hedge funds got off to a rough start in 2018. Preliminary data for March shows that managers have posted performance-based losses of US$1.3 billion while net asset outflows stand at US$1.7 billion, bringing the current assets under management (AUM) of the industry to US$2.48 trillion- over US$30.0 billion higher than the record US$2.45 trillion reported by the end of last year.

Figure 1a: Summary monthly asset flow data since January 2013
 

 

Key highlights for March 2018:

  • Hedge funds were down 0.13% as of Q1 2018 – their worst quarterly showing since Q1 2016. Assets of the industry expanded by US$31.1 billion over the past three months largely on account of investor subscriptions which stand at US$31.8 billion since the start of 2018.
  • The US$256.0 billion CTA/Managed futures mandated hedge fund industry has seen its asset base contract by US$13.5 billion year-to-date, with managers witnessing the highest performance-based losses of US$12.6 billion among strategic mandates for Q1 2018, while investor redemptions stood at US$0.9 billion over the same period. The Eurekahedge CTA/managed Futures Hedge Fund Index was down 1.54% year-to-date.
  • The US$1.65 trillion North American hedge fund industry posted the steepest performance-based losses among regional mandates for Q1 2018, totalling US$1.2 billion while net asset inflows to the region stood at US$20.1 billion – almost 17% lower compared to the net asset inflows recorded in Q1 2017.
  • Multi-strategy mandated hedge funds saw the highest net outflows among strategic mandates for Q1 2018 following steep redemptions worth of US$15.3 billion in February – the highest monthly redemption on record. The Eurekahedge Multi-Strategy Hedge Fund Index was down 0.71% in March and down 0.08% year-to-date.
  • China-US trade war concerns jolted markets, with Asia ex-Japan hedge funds down 1.44% in March, and 0.18% for Q1 2018. Equity-long/short managers focused on the region posted their worst quarterly results since Q1 2016 and are down 0.41% for the year. Japanese managers were also down 1.69% in March and down 1.58% year-to-date – the worst performing regional mandated funds in Q1 2018.
  • The Eurekahedge Crypto-Currency Hedge Fund Index was down for three consecutive months, losing roughly 34.7% in March bringing its Q1 2018 losses to 48.37%. In contrast, bitcoin has lost over 50.0% over the same period.
  • Amidst a slowing launch pipeline in Asia, new funds launched in 2018 are charging higher performance and management fees of 17.75% and 1.41% respectively. In contrast, hedge fund start-up fees stood at 15.43% and 1.30% respectively in 2017. For more details, please refer to the 2017 Overview: Key Trends in Asian Hedge Funds report.

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1 Based on 41.72% of funds which have reported March 2018 returns as at 12 April 2018
2 MSCI AC World Index (Local)
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