After a month of negative returns and asset flows, hedge funds rebounded in February to bring the assets under management back to US$1.48 trillion. Managers skilfully navigated the mid-month reversals in market themes while underlying markets also ended the month in positive territory – the MSCI World Index was up 1.23% in February.
The increase in assets under management was delivered both from performance-based gains as well as positive net asset flows. Managers across most regions were able to handle the early volatility in the markets as well as changes in index directions to deliver gains of US$2.47 billion. Investors have also started to make their allocations for the year, with the sector seeing positive net flows to the tune of US$4.33 billion during the month.
Figure 1 shows the monthly asset flows across the hedge fund industry since the end of 2007.
Figure 1: Summary Monthly Asset Flow Data since 2008