Asset Flows Update

After witnessing two months of declines in May and June, hedge funds reverted to their winning ways in July with a string of strong performances. The Eurekahedge Hedge Fund Index gained a strong 1.46%1 during the month, bringing the July year-to-date figure to 1.21%; comparatively, the MSCI World Index is down 3.7% July year-to-date.

Total assets under management grew by US$18.1 billion during the month, bringing the size of the global hedge fund industry to US$1.52 trillion. While performance-based gains for the month stand at US$7.7 billion as hedge funds from all regions recorded positive returns, the sector also witnessed strong positive net flows of US$10.4 billion.

Despite two months of negative returns, investors have been forthcoming in their allocations to hedge funds, keeping in consideration their performance in 2009 as well as the downside protection through the financial crisis and the recent market volatility.

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

Figure 1: Summary Monthly Asset Flow Data since Dec 2008

Below are the highlights for the month of July:

  • Inflows to US hedge funds crossed US$30 billion July YTD.
  • All regions and strategies posted positive returns and asset flows in July.
  • UCITS III hedge funds attracted further inflows of US$5 billion July YTD.
  • Event driven funds rose 48.4% since November 2008 and gained US$25 billion through 15 months of net positive asset flows.

In terms of regional mandates, European hedge funds saw the strongest gains in July as investor…



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1 Based on 62.18% of the funds reporting their July 2010 returns as at 17 August 2010.