Asset Flows Update

The Eurekahedge Hedge Fund Index declined 0.31%1 in October, trailing the global equity market which edged 1.93% higher over the month, as represented by the MSCI ACWI (Local). Global equities rallied throughout the month, supported by the continuation of the US-China trade talks which culminated in a partial trade agreement between the two countries. The bond market saw yields climb as the risk-on sentiment returned to the equity market and the Fed signalled that they are done with rate cuts for the moment. Returns were positive across regions, with Asia ex-Japan mandate returning 2.36% for the month. On a year-to-date basis, fund managers focusing on Asia ex-Japan were up 9.74% over the first 10 months of the year, outperforming their North American peers who returned 6.26% over the same period.

Final asset flow figures for September showed that hedge fund managers recorded performance-based gains totalling US$9.8 billion, as well as investor redemptions totalling US$12.5 billion throughout the month. Preliminary data for October revealed that the global hedge fund industry witnessed US$2.8 billion of performance-driven gains and US$0.1 billion of net investor inflows. The assets under management (AUM) of the global hedge fund industry stood at US$2,272.8 billion as of October 2019. On a year-to-date basis, the industry has seen US$107.5 billion of performance growth and US$126.9 billion of investor redemptions over the first 10 months of 2019.

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

Key highlights for October 2019:

  • The Eurekahedge Hedge Fund Index was up 0.31% in October, bringing its year-to-date return to 6.27%. Roughly 30.1% of the hedge fund managers comprising the index have recorded double-digit gains over the first 10 months of the year.
  • The global hedge fund industry AUM has declined by US$19.5 billion as of October 2019 year-to-date. Net outflows figure for Q3 stood at US$40.6 billion, which compares to the US$46.4 billion and US$40.0 billion of net outflows in Q1 and Q2 2019 respectively.
  • The Eurekahedge North American Hedge Fund Index was up 6.26% year-to-date, as fund managers focusing on the region benefited from the equity market rally throughout the first 10 months of the year. The S&P 500 has gained 21.17% as of October 2019 year-to-date, while the tech-heavy NASDAQ Composite was up 24.97% over the same period. North American hedge fund managers have recorded US$76.5 billion of performance growth year-to-date.
  • The Eurekahedge Greater China Hedge Fund Index rallied 3.70% in October on the back of the progress in US-China trade negotiations, pushing its year-to-date return to 11.82%. The US$29.1 billion mandate has seen US$1.5 billion of performance growth, offset by US$0.4 billion of investor redemptions year-to-date.
  • The Eurekahedge CTA/Managed Futures Hedge Fund Index was down 1.11% in October, as weak macroeconomic data in China raised concerns regarding global oil demand. Preliminary data showed that CTA/managed futures fund managers have generated US$13.9 billion of performance growth year-to-date, offset by investor redemptions totalling US$11.1 billion. This contrasts with how the mandate saw its AUM base decline by US$45.5 billion throughout 2018.
  • Hedge fund managers utilising fixed income strategies ended the month of October up 0.44% despite the rally in bond yields throughout the month. On a year-to-date basis, the Eurekahedge Fixed Income Hedge Fund Index has returned 6.43%.
  • The Eurekahedge ILS Advisers Index gained 1.17% in October, pushing its year-to-date return to 1.97%. Despite being a calm period of insurance losses, the first half of 2019 had seen ILS hedge fund managers crippled by loss creep from past events.
  • The Eurekahedge Crypto-Currency Hedge Fund Index was up 8.84% in October as Bitcoin price rallied 14.09% during the month. On a year-to-date basis, crypto hedge fund managers have returned 37.62% over the first 10 months of 2019.

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1 Based on 48.30% of funds which have reported October 2019 returns as at 14 November 2019