Hedge funds produced record returns in May, with the Eurekahedge Hedge Fund Index up a remarkable 5.4%1 - its best monthly return in almost a decade. The month’s performance was achieved on the back of strongly rallying equity markets – which surged for the third consecutive month (the MSCI World Index rose 8.6%) amid increasing investor sentiment and healthier risk appetites. Hedge funds also saw net inflows in May, the very first time in 10 months; redemptions of US$8 billion were more than offset by gross inflows of 19.3 billion during the month.
In terms of geographical investment mandates, Asia ex-Japan investing funds turned in the best returns (averaging 10.4%), as most regional equity markets rallied strongly on visible signs of a slowing economic contraction; the MSCI Asia Pacific ex-Japan Index rose 13.9% during the month. Broader emerging market managers also benefited from their exposure to equities in Asia, while allocations to other regions that benefited from the upturn in crude and commodity prices (the CRB Index had a record month, returning 14% in May), also proved rewarding; the Eurekahedge Emerging Markets Hedge Fund Index rose 8% during the month.
