Asset Flows Update

Hedge funds remain on track to finish the year on a high note as the Eurekahedge Hedge Fund Index gained 0.40%1 in November, making it the fifth consecutive month of positive returns. The month was marked by volatile market conditions as investor sentiment changed suddenly from the bullish leanings continuing from October to reignited fears of the European debt contagion. The MSCI World Index2 was down 2.35% in November.

Total assets under management registered a slight decline of US$2.55 billion3, bringing the total size of the industry to US$1.64 trillion. Asset flows for the month were marginal to slightly negative, with net outflows of US$0.19 billion while performance-based declines accounted for losses of US$2.36 billion. It should be noted here that the Eurekahedge Hedge Fund Index is a non-asset-weighted mean-return index and as such, the change in assets due to performance can at times go contrary to index movements depending on the performance of larger hedge funds.

Figure 1 shows the monthly asset flows across the hedge fund industry since December 2008.

Figure 1: Summary Monthly Asset Flow Data since December 2008

Below are the highlights for the month of November:

  • All regions posted flat to positive returns for November, with the Eurekahedge Hedge Fund Index up 0.40% for the month and 7.72% YTD.
  • Assets in Asian hedge funds crossed US$125 billion for the first time since December 2008.
  • Distressed debt hedge funds remained the best performers in 2010, up 18.89% YTD November.
  • Relative value hedge funds delivered six months of back-to-back positive returns, up 7.08% since June.
  • North American hedge funds witnessed 10 consecutive months of net positive asset flows, attracting US$56.22 billion over this period.
  • Hedge funds are ahead of underlying markets by 5.57% YTD November.

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1 Based on 64.51% of funds which have reported November 2010 as of 15 December 2010.

2 MSCI The World Index Free - USD

3 For an update on November 2010 asset flows, please check our Twitter account @eurekahedge on Tuesday 21st December.