Asset Flows Update

The Eurekahedge Hedge Fund Index slumped 0.71%1 in May, recording its first monthly decline in 2019 after posting four consecutive positive months. On a year-to-date basis, hedge fund managers are still up 4.32%, supported by the recovery in global equity and bond markets in the first quarter. The return of the US-China trade tension during the month of May weighed on the global economic outlook, resulting in the weak performance of global equities. The MSCI AC World Index2 plummeted 6.12% in May, as investors were unnerved by the escalating trade disputes. On the other hand, global government bonds saw gains as yields fell on the back of expectations that the Fed will soon cut rates in response to weak economic outlook.

Final asset flow figures for April showed that hedge fund managers generated performance-based gains totalling US$19.7 billion, offset by investor redemptions of US$13.7 billion. Preliminary data for May showed that the industry suffered US$18.3 billion of performance-driven losses, as well as US$0.9 billion of net investor outflows. The assets under management (AUM) of the global hedge fund industry stood at US$2,292.7 billion as of May 2019. On a year-to-date basis, the industry has seen US$61.5 billion of performance growth and US$61.0 billion of investor redemptions over the first five months of 2019.

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

Key highlights for May 2019:

  • The Eurekahedge Hedge Fund Index was down 0.71%1 in May, bringing its year-to-date return to 4.32%. Roughly 15.0% of the hedge fund managers comprising the index have recorded double-digit gains over the first five months of the year.
  • The global hedge fund industry AUM has grown by US$0.5 billion as of May 2019 year-to-date. Final Q1 2019 net outflows figure stood at US$46.4 billion, just under half of the investor redemptions totalling US$94.7 billion seen in the final quarter of 2018.
  • The Eurekahedge Asia ex Japan Hedge Fund Index was up 5.51% year-to-date, supported by the recovering Asian equity markets throughout the first quarter of 2019. However, the return of the trade tension between the US and China posed as a headwind for fund managers focusing on the region. Investor redemptions from the mandate stood at US$4.2 billion over the first five months of the year.
  • North American hedge fund managers were down 1.22% in May, as the region’s equity markets slumped under the US-China trade talk breakdown. On a year-to-date basis, the Eurekahedge North American Hedge Fund Index was up 5.28%.
  • The Eurekahedge CTA/Managed Futures Hedge Fund Index declined 0.43% in May, with mixed returns among its underlying regional mandates. Fund managers with long exposure to the energy sector suffered losses from the sharply falling oil prices which resulted from concerns over global economic slowdown. On the other hand, precious metals registered gains as the equity market volatility boosted demand for gold during the month. The strategic mandate has seen investor redemptions totalling US$10.6 billion year-to-date.
  • Fund managers utilising AI/machine learning strategies ended May down 3.70%, registering their first monthly loss in 2019. On a year-to-date basis the Eurekahedge AI Hedge Fund Index was down 0.20%.
  • The Eurekahedge ILS Advisers Index was down 0.84% in May, bringing its year-to-date loss to 1.10%. ILS hedge fund managers suffered considerable losses from the recent hurricane seasons in 2018 and 2017, during which the index was down 3.92% and 5.60% respectively. However, investor interest level has remained robust through the recent years, with an estimated US$18.9 billion of net allocations made into the ILS hedge fund space since the beginning of 2017.
  • The Eurekahedge Crypto-Currency Hedge Fund Index rallied 33.74% in May, boosted by the rally in crypto assets which saw Bitcoin breaching the US$8,000 level for the first time since July last year. The index was up 68.79% as of May 2019 year-to-date, recovering most of the losses it suffered in 2018.

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1 Based on 39.58% of funds which have reported May 2019 returns as at 13 June 2019
2 MSCI AC World Index All Cap (Local)