Asset Flows Update

Hedge funds were up 2.27%1 in October as better-than-expected corporate earnings and anticipation of further quantitative easing resulted in sustained rallies in global equity markets. After witnessing the fourth consecutive month of positive returns, the Eurekahedge Hedge Fund Index now stands at a healthy 7.33% year-to-date October, with the sector poised to finish the year on a high note, as fears of a double-dip recession subside.

Total assets under management grew by US$28.2 billion in October, bringing the size of the industry to US$1.63 trillion, just above October 2008 level. Most of the gains were delivered by performance-based growth, with managers making the most of the upside in underlying markets and notching up hefty profits to the tune of US$18 billion. The sector also attracted capital for the fourth month running with healthy net positive asset flows of US$10.2 billion.

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 October:

  • Hedge funds attracted US$61 billion over the first 10 months of 2010, taking the industry to US$1.63 trillion, above October 2008 level.
  • Hedge funds are up 7.33% YTD October, ahead of global markets by 4.64%.
  • The Eurekahedge Long/Short Equity Hedge Fund Index is up 29.8% over the last 24 months and assets in long/short equity funds crossed US$500 billion.
  • Strong launch activity was seen in the first three quarters, with more than 600 funds launched in 2010 so far.

Most regional mandates witnessed net positive asset flows in October, with North American hedge funds drawing the most inflows, gaining US$5.7 billion. The region's managers have consistently attracted capital through 2010, witnessing nine consecutive months of positive flows – the net allocations to North American funds in 2010 now stand at…

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1 Based on 59.48% of the NAV for October 2010 as of 14 November 2010.