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The Eurekahedge Hedge Fund Index¹ was up 4.50% in November 2020 on the back of the robust performance of the global equity market as represented by the MSCI ACWI² which gained 11.63% over the same period. Global equities reacted positively to the relatively smooth conclusion of the US presidential election and better-than-expected results of the effectiveness of the COVID-19 vaccines, eclipsing worries about the near-term economic outlook. In Europe, despite the reimposition of restrictive lockdown measures across many countries in the region to curb the increasing number of new COVID-19 infections, European stock indices rallied strongly as news of the better-than-expected efficacy of several vaccine candidates led to optimism that the worst of the pandemic could soon be over. The FTSE 100 and DAX Index rebounded strongly in November, gaining 12.35% and 15.46% respectively, reversing the steep losses suffered in October when they lost 4.92% and 9.44% respectively. Over in the US, the successful election of Joe Biden as the 46th president of the United States drove a risk-on mood in markets as investors looked forward to greater certainty and a more diplomatic and multilateral approach in foreign policy matters. The better-than-expected news on COVID vaccine development added fuel to the post-US election rally with the DJIA and S&P500 ending November with a gain of 11.84% and 10.75% respectively. Returns were positive across geographic mandates in November, with North American fund managers up 6.46%, outperforming their Asia ex-Japan peers who were up 5.41%. European fund managers were also up 4.27% in November. Across strategies, long/short equities, event driven and multi-strategy fund managers were up 6.88%, 6.06% and 3.71% respectively throughout the month as the strong performance of the global equity market supported the performance of these strategies.

Final asset flow figures for October showed that hedge fund managers recorded performance-based losses totalling US$7.2 billion and net investor redemptions of US$12.1 billion throughout the month. Preliminary data for November estimates that the global hedge fund industry witnessed US$26.3 billion of performance-driven gains combined with US$8.8 billion of net investor outflows. The assets under management (AUM) of the global hedge fund industry stood at US$2,166.6 billion as of end-November 2020. The global hedge funds industry has seen US$38.4 billion of performance-based decline and US$97.7 billion of investor redemptions over the first 11 months of 2020.

Figure 1a: Summary monthly asset flow data since January 2013
 

Key highlights for November 2020:

• Hedge fund managers recorded their strongest return since 2009 and were up 4.50% in November, supported by the strong performance of the global equity market as represented by the MSCI ACWI (Local) which generated 11.63% return throughout the month. On a year-to-date basis, global hedge funds were up 8.09%, with more than 40% of its underlying constituents having underperformed the global equity market over the first 11 months of 2020.

• Assets under management for the global hedge funds industry have rebounded increasing by US$128.0 billion over the past eight months since March 2020. This has come from performance-driven gains of US$139.8 billion and net investor outflows of US$11.8 billion. This marks a sharp recovery following a US$264.1 billion asset decline in Q1 2020.

• The Eurekahedge North American Hedge Fund Index were up 6.46% in November, outperforming their Asia ex-Japan and European peers who were up 5.41% and 4.27% during the month respectively. In terms of year-to-date performance, Asia ex-Japan and North American hedge funds generated a double-digit performance of 18.94% and 11.13% respectively, compared to the 1.85% and -2.13% of their European and Japanese counterparts over the first 11 months of the year.

• The Eurekahedge Greater China Hedge Fund Index was up 5.38% in November, supported by the strong performance of the region’s equity market as seen from the 9.27% and 5.64% return of Hang Seng and CSI 300. In terms of year-to-date return, Greater China hedge funds were up 30.69% on track to posting their best annual performance since 2009 with nearly a quarter of their constituents recording a YTD return in excess of 40%.

• The Eurekahedge Long Short Equities Hedge Fund Index was up 6.88% in November, registering their best monthly performance since 2000. The strong rally of the global equity market supported the performance of the fund managers with the DAX and S&P 500 up 15.46% and 10.75% respectively. On a year-to-date basis, long/short equities hedge funds were up 12.47% as of November 2020, bringing their performance since end-March to 27.08% which marks their best 8-month performance since the inception of the index.
  

• Hedge fund managers utilising relative value strategies were up 5.90% in November, recording their best monthly performance since the inception of the index as reflected in the Eurekahedge Relative Value Hedge Fund Index. On a year-to-date basis, relative value hedge funds have also done well with an 8.69% gain over the first 11 months of the year, compared to 6.17% and 4.51% of macro and multi-strategy hedge funds respectively.

• Hedge fund managers utilising arbitrage strategies were up 0.67% in October, outperforming most of their major strategic peers over the month, with macro and multi-strategy hedge funds down 0.83% and 0.42% respectively. On a year-to-date basis, arbitrage focused hedge funds also consistently outperformed their peers as they gained 6.66%, compared to 3.67% and 0.68% of macro and multi-strategy hedge funds over the first 10 months of 2020.

• Hedge funds utilising structured credit strategies were up 2.52% in November, recording their eighth consecutive month of positive return as tracked by the Eurekahedge Structured Credit Hedge Fund Index which rebounded by 20.78% since end-March after a poor performing first quarter. In terms of year-to-date return, structured credit hedge funds were down 5.81% as of November 2020, underperforming their fixed income and distressed debt peers who returned 3.42% and 0.13% respectively.

• Fund managers focusing on cryptocurrencies were up 25.63% in November as tracked by the Eurekahedge Crypto-Currency Hedge Fund Index , supported by the robust performance of Bitcoin which was up 33.45% and trading around its 2017 peak. Looking at year-to-date return, cryptocurrency hedge funds are up 128.60%, compared to the 149.81% return of Bitcoin over the first 11 months of 2020.

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