After recording its best 3-month period on record, the Eurekahedge Hedge Fund Index finished flat (0.2%1) in June, against flat to negative monthly returns across most major equity markets and a 4.4% decline in commodities, as measured by the Continuous Commodity Index. Managers saw net inflows (US$6.2 billion or 0.5%) for the second consecutive month, which coupled with negligible net losses of US$350 million (0.03%) from performance brought the industry’s assets to US$1.33 trillion as at the end of 1H2009.
Gross inflows into hedge funds totalled a healthy US$19.2 billion (or 1.5% of end-May assets), about two-thirds of which were negated by redemptions of US$13 billion. A good portion of these redemptions (nearly US$5 billion) represented the assets withdrawn by funds of hedge funds, which continued to witness redemption pressures as investors are increasingly opting to invest directly into hedge funds for better returns and capital protection, as well as relatively lower fees.
Figure 1: Summary Monthly Asset Flow Data YTD
Continued inflows into hedge funds in June confirm that the month of May marked a trend reversal in hedge fund asset flows. This suggests that our forecasts drawn earlier this year about inflows surpassing outflows around mid-2009 were accurate2. Recent inflows also suggest ...
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1 Based on 74.7% of the funds reporting their returns in June 2009 as at 21 July 2009.