Introduction
Hedge funds ended September flat with the Eurekahedge Hedge Fund Index declining marginally 0.05%1, outperforming underlying markets as the MSCI World Index2 slipped 1.86%, with market volatility picking up after the seasonal summer doldrums. In the US, investors are gearing up in earnest at the prospect of tighter monetary policy in the United States as the economic recovery continues to gain strength, with concerns continuing to remain regarding the pace of a rate rise given the mammoth challenge of unwinding the Fed’s balance sheet. Over in the Eurozone, the ECB surprised market participants by embarking on further easing, cutting interest rates another 0.10% and announcing targeted long term refinancing operations (TLTRO), driving the euro down to a two-year low against the greenback.
Final asset flow figures for August revealed that managers reported performance-based gains of US$18.3 billion while recording net asset outflows of US$0.9 billion. Preliminary data for September shows that managers have posted performance-based losses of US$1.2 billion while recording net outflows of US$9.5 billion, bringing the current assets under management (AUM) of the global hedge fund industry to a total of US$2.13 trillion.
Figure 1: Summary monthly asset flow data since January 2011
Key highlights for September 2014:
- Hedge funds are up 3.82% year-to-date, registering performance-based gains of US$56.4 billion while witnessing net asset inflows of US$60.7 billion in 2014.
- Currently, assets under management of funds of hedge funds have recovered to US$529.3 billion, an increase of US$5.7 billion from December 2013.
- Latin American managers suffered losses of 2.02% during the month, though outperforming the MSCI Latin America Index3 which fell 7.74%. The AUM of Latin America focused funds fell 4.50% in September.
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