Hedge funds were up for the second month running in August, amid positive movements in underlying markets. The Eurekahedge Hedge Fund Index was up 0.63%1 during the month, bringing its year-to-date (YTD) return to a healthy 3.16%. Comparatively the MSCI World Index gained 1.64%2 on the back of increasing prospects of quantitative easing and positive US economic data – with its YTD gain standing at 7.79%.
Total assets under management (AUM) increased by US$7.8 billion during the month, bringing the size of the industry to US$1.74 trillion. Hedge funds posted performance-based gains of US$2.9 billion as most strategies were profitable during the month. After three months of net redemptions, the industry also witnessed healthy allocation activity with net positive asset flows of US$5 billion as investor sentiment turned positive.
Figure 1: Summary monthly asset flow data since January 2010
Key highlights for August 2012:
Hedge funds gained 0.63% in August and were up 3.16% year-to-date.
Relative value hedge funds are up 7.38% August year-to-date and have attracted significant assets in 2012 – total AUM now stands at US$60 billion.
Event driven and distressed debt hedge funds posted their best return in six months.