March was a difficult month for hedge funds across the board, with performance-based declines in assets among most strategies and redemptions in some; the composite Eurekahedge Hedge Fund Index shed 1.9%1.
March assets under management (AuM) data from early reporting funds to the Eurekahedge databases suggests that hedge funds globally shed their total assets to the tune of US$5.1 billion in performance-based declines, but were almost fully offset by net investor inflows of US$4.7 billion. As a result, the net change in month-on-month industry total assets was marginal, and is estimated at US$1,648 billion2 at the end of 1Q2008. Asset flows year to date are summarised in Figure 1 below. Performance-based flows during the month were a reflection of persistent concerns on the slowing of global growth and the likelihood of a recession in the US, heightened volatility across the underlying markets (particularly prior to the Fed’s 75 bps rate cut on 18 March) and weak credit markets.
