Research

Asset Flows Update

Introduction

The Eurekahedge Hedge Fund Index gained 0.55% in April1 while underlying markets as represented by the MSCI World Index2 was up 1.18% over the same period. Among regional mandates, European managers posted the best gains, up 0.78% during the month followed by North American hedge funds which saw gains of 0.27%. Across strategies, distressed debt hedge funds led the table with gains of 1.12% followed by macro hedge funds with 0.84%.

Final asset flow figures for March 2018 revealed that managers reported performance-based losses of US$6.6 billion while recording net asset inflows of US$6.1 billion. Preliminary data for April shows that managers have posted performance-based gains of US$1.5 billion. Preliminary net asset flows were negative in April with US$3.4 billion of inflows from the industry. This brings the current assets under management (AUM) of the global hedge fund industry to a total of US$2.48 trillion.

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

Key highlights for April 2018:

  • Hedge funds bounced back to positive territory in April, up 0.55% with the underlying markets, as represented by the MSCI AC World Index (Local) up 1.18% over the same period. On a year-to-date basis, managers gained 0.23% with 10% of them posting returns in excess of 5%.
  • Total hedge fund assets grew by US$31.9 billion over the past four months, with US$36.2 billion attributed to investor inflows while managers posted performance-based losses of US$4.4 billion. Investors have been selective in their allocations across strategies with long/short equities and macro hedge funds seeing stronger subscriptions year-to-date.
  • CTA/managed futures managers posted their third consecutive month of investor redemptions, totalling US$5.9 billion, bringing its year-to-date outflows to US$2.8 billion. Managers have posted performance-based losses of US$11.7 billion as of April 2018 year-to-date, the highest among all strategic mandates.
  • All strategic mandates were up this month with the Eurekahedge Distressed Debt Hedge Fund Index posting the best returns, up 1.12% during the month – the only strategy to post four consecutive month of gains since the start of the year. Distressed debt managers saw investor redemptions of US$1.3 billion as of 2018 year-to-date while performance-based gains of US$0.8 billion were recorded.
  • Asian hedge funds posted their third consecutive month of losses in April, down 0.12%. On a year-to-date basis, Asian managers lost 0.03%, with weaknesses led by Japan and India mandated hedge funds which were down 1.69% and 1.19% respectively.
  • Asset base for the US$1.65 trillion North American hedge fund industry grew by US$18.4 billion over the year, with most of this growth attributed to investor allocations of US$22.1 billion year-to-date, while performance-based losses totalling US$3.7 billion were recorded.
  • The Eurekahedge Crypto-Currency Hedge Fund Index rebounded to positive territory in April, up 45.43%, while its 2018 year-to-date figure is still in the red, down 21.87%. In contrast, bitcoin has lost over 26% over the same year-to-date period.
  • While hedge funds with exposure into Latin America posted impressive returns this year, launch activity has been rather muted. Closures have outpaced launches annually from 2011 to 2018 year-to-date, with a total of 236 closures and 127 fund launches during this period. For more details, see the 2018 Key Trends in Latin American Hedge Funds report.

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1 Based on 38.15% of funds which have reported April 2018 returns as at 10 May 2018
2 MSCI AC World Index (Local)
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