Introduction
Hedge funds finished 2014 up 4.46%, with the Eurekahedge Hedge Fund Index gaining another 0.14%1, outperforming underlying markets as the MSCI World Index2fell 0.80% in December after equities retreated from their intra-month heights. Further steep falls in oil prices and fears of a global slowdown contributed to an atmosphere of uncertainty, which caused volatility to pick up in the final trading month of the year as the market traded in a choppy sideways manner. Nevertheless, better-than-expected US unemployment figures and growth figures lent additional credence to the country’s recovery and managed to support equities higher during the month despite closing lower.
Final asset flow figures for November revealed that managers reported performance-based gains of US$25.6 billion while recording net asset outflows of US$3.8 billion. Preliminary data for December shows that managers have posted performance-based gains of US$5.7 billion while recording net outflows of US$6.7 billion, bringing the current assets under management (AUM) of the global hedge fund industry to a total of US$2.14 trillion.
Figure 1: Summary monthly asset flow data since January 2011
Key highlights for December 2014:
- The total AUM of the industry grew by US$125.9 billion in 2014 - well below the levels seen in 2013 when industry assets grew by US$240.4 billion.
- Net asset inflows for the year stand at US$37.7 billion, less than a third of the inflows recorded in 2013. Inflows for 1H 2014 stood at US$75.8 billion while 2H 2014 has seen net outflows of US$38.1 billion.
- Asia ex-Japan investing funds delivered the best returns globally and were up 9.36% for the year, outperforming the MSCI Asia ex Japan Index3 by almost 600 basis points.
- CTA/managed futures funds reported performance-based gains of US$24.0 billion for the year - their highest annual gain since 2008, led by North American CTAs with year-to-date returns of 10.00%
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