Asset Flows Update

The Eurekahedge Hedge Fund Index was up 1.38%1 in June, supported by the strong performance of the global equity market as represented by the MSCI ACWI IMI (Local), which returned 2.70% over the same month. The resumption of the economic activity of most countries, particularly in Europe and the US combined with an upbeat macroeconomic data, boosted market optimism towards a faster-than-expected recovery of the global economy from the crisis, which provided support to the performance of risk assets. In the US, strong labour data was recorded, particularly the nonfarm payroll that beat the market expectation by a substantial margin, which acted as a tailwind to the performance in the region's equity market. The tech-heavy NASDAQ was up 4.05% in June, bringing its year-to-date return into double-digits, while the S&P 500 posted 0.87% return during the month. In the same vein, the proposed 750 billion euros of stimulus package by the EU leaders, to aid the economic impact of the COVID-19 pandemic, boosted European equities throughout June. The DAX and CAC 40 were up 6.25% and 5.12% over the month. Over in Asia, the Chinese equity market shrugged off renewed tension between the US and China, as the region printed a robust macroeconomic data, notably the Purchasing Manager Index, which returned to an expansion level above 50. The Shenzhen Composite and Hang Seng registered 10.56% and 6.38% return throughout the month of June.

Final asset flow figures for May showed that hedge fund managers recorded performance-based gains totalling US$27.3 billion and net investor allocations of US$0.3 billion throughout the month. Preliminary data for June estimated that the global hedge fund industry witnessed US$2.2 billion of performance-driven gains offset by US$6.6 billion of net investor outflows. The assets under management (AUM) of the global hedge fund industry stood at US$2,104.6 billion as of end-June 2020. On an annual basis, the industry had seen US$105.5 billion of performance decline and US$92.6 billion of investor redemptions over the first half of 2020.

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

Key highlights for June 2020:

  • The Eurekahedge Hedge Fund Index gained 1.38% in June, bringing its year-to-date loss to 1.28%. Global hedge funds continued to recover the losses they suffered in the first quarter, supported by a strong rebound of risk assets. The underlying global equity market, as represented by the MSCI AC World Index was down 7.02% over the first half of 2020.
  • The global hedge fund industry AUM has declined by US$198.1 billion as of June 2020 year-to-date. Investors have redeemed US$105.5 billion from the hedge fund industry in the first half of the year, while performance driven losses stood at US$92.6 billion.
  • The Eurekahedge North American Long Short Equities Hedge Fund Index gained 1.93% in June, supported by the strong performance of US equities. The economic stimulus package approved by the US congress, on top of the Fed's monetary policy easing to address the coronavirus fallout, boosted the equity market in the region. In terms of year-to-date return, the mandate was down 1.10% as of June 2020.
  • The Eurekahedge Fixed Income Hedge Fund Index was up 2.00% in June, bringing its year-to-date loss to 1.95%. The accommodative central bank policies, particularly the Fed and the ECB resulted in lower government bond yield throughout the year.

  • The Eurekahedge Structured Credit Hedge Fund Index posted its 3rd consecutive month of gains, with the index up 11.57% in Q2 2020 in comparison to staggering losses of 21.25% seen in Q1 2020 earlier this year.
  • Hedge funds utilising AI strategies were up 1.97% in June – recording its fourth consecutive month of positive performance. On a year-to-date basis, the Eurekahedge AI Hedge Fund Index was up 4.18% as of June 2020.

The full article is available in The Eurekahedge Report accessible to paying subscribers only.

Subscribers may continue to login as usual to download the full report and non-subscribers may email to enquire on how to obtain the full research report.

1 Based on 36.03% of funds which have reported June 2020 returns as at 10 July 2020