Asset Flows Update

Hedge funds performance for the year 2009 continued the positive run through August with the composite Eurekahedge Hedge Fund Index gaining 1.3%1, while the MSCI World Index rose 3.9% through August amid increasing investor confidence. Hedge funds witnessed their fourth consecutive month of net increase in assets, which climbed more than US$21 billion in August to US$1.38 trillion. Over this four-month period, the hedge fund industry grew by roughly US$100 billion – the largest sustained growth period since end-2007.

The primary driver of the increase in assets was the US$12.6 billion net influx of capital, suggesting that investors’ confidence in hedge funds is gaining more ground. Performance figures were also encouraging, as assets increased by 0.6% or US$8.8 billion due to positive returns during the month. Figure 1 shows the monthly asset flows across the hedge fund industry since the start of 2008.

Figure 1: Summary Monthly Asset Flow Data for 2008-to-date

Going forward, we expect hedge funds to deliver positive returns through the rest of this year irrespective of how the underlying markets fare. Additionally, we expect hedge fund assets as at the year-end to be...


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1 Based on 65% of the funds reporting their Aug 2009 returns as at 16 Sep 2009.