Overview of 2008 Key Trends in Fund of Hedge Funds
Eurekahedge
June 2009
Introduction
Funds of hedge funds started 2009 on a positive note, outperforming (albeit marginally) their single manager counterparts, who faced high volatility in the underlying markets, amid widespread uncertainty regarding the health of the global financial sector and persistent recessionary concerns across the board. However, this outperformance was seen after a year of notable underperformance in 2008 – when funds suffered losses amid steep market downturns and unprecedented redemption pressures; the Eurekahedge Hedge Fund Index shed 11.6% during the year, while the Eurekahedge Fund of Funds Index lost 19.6%.
Although one mostly heard and read about record redemptions out of hedge funds in the news and media throughout 2008, it is worth noting that funds of hedge funds also faced notable cash withdrawals from investors during the year, which in fact accounted for over half of the net outflows that were seen from the single manager space – net redemptions out of funds of hedge funds stood at US$116 billion (or 14.4%) in 2008, while those out of hedge funds amounted to US$219 billion (or 11.6%).
