The Eurekahedge Hedge Fund Index declined 0.30%1 in September, trailing the global equity market which edged 2.04% higher over the month, as represented by the MSCI ACWI (Local). Global equities rallied through the earlier half of the month, supported by the resumption of the US-China trade talks, only to retreat toward the end of the month as an impeachment inquiry was launched against the US President. The bond market saw yields decline as major central banks continued with their easing policies: the Fed cut its rate for the second time this year in September, and the ECB announced new stimulus packages, including the restart of their asset purchases. Returns were mostly positive across regions, with the exception of fund managers focusing on Europe, who were down 0.10% in September. Nonetheless, the mandate is still up 3.75% on a year-to-date basis. Japan-focused hedge funds were up 1.26% throughout the month, outperforming their Asia ex-Japan peers who were up 0.97%.
Final asset flow figures for August showed that hedge fund managers recorded performance-based losses totalling US$6.7 billion, as well as investor redemptions totalling US$8.0 billion throughout the month. Preliminary data for September revealed that the global hedge fund industry witnessed US$3.4 billion of performance-driven gains and US$6.2 billion of net investor outflows. The assets under management (AUM) of the global hedge fund industry stood at US$2,269.9 billion as of September 2019. On a year-to-date basis, the industry has seen US$98.3 billion of performance growth and US$120.8 billion of investor redemptions over the first three quarters of 2019.
Figure 1a: Summary monthly asset flow data since January 2013
Key highlights for September 2019:
- The Eurekahedge Hedge Fund Index was down 0.30% in September, bringing its year-to-date return to 5.70%. Roughly 28.3% of hedge fund managers comprising the index have recorded double-digit gains over the first three quarters of 2019.
- The global hedge fund industry AUM has declined by US$22.4 billion as of September 2019 year-to-date. Net outflows figure for Q3 stood at US$34.3 billion, as investor redemptions continued to slow down. Hedge fund managers recorded US$46.4 billion and US$40.0 billion of net outflows in the first and second quarters of 2019 respectively.
- The Eurekahedge North American Hedge Fund Index was up 6.21% year-to-date, as fund managers focusing on the region benefited from the equity market rally throughout the first three quarters of the year. The S&P 500 has gained 18.74% as of September 2019 year-to-date, while the tech-heavy NASDAQ Composite was up 20.12% over the same period. North American hedge fund managers have recorded US$69.3 billion of performance growth year-to-date.
- The Eurekahedge Greater China Hedge Fund Index lost 0.41% in September, dragging its year-to-date gain to 8.26%. The US$29.1 billion mandate has seen US$1.5 billion of performance growth, offset by US$0.4 billion of investor redemptions year-to-date.
- The Eurekahedge CTA/Managed Futures Hedge Fund Index was down 2.07% in September, as managers struggled to profit from the volatile oil market following the Saudi attack. Preliminary data showed that CTA/managed futures fund managers have generated US$18.4 billion of performance growth year-to-date, offset by investor redemptions totalling US$10.2 billion. This contrasts with how the mandate saw its AUM base decline by US$45.5 billion throughout 2018.
- Hedge fund managers utilising fixed income strategies ended the month of September up 0.14% as easing policies adopted by major central banks continued to provide support for the global bond market. The Fed’s rate cut and the ECB’s stimulus package pushed yields lower throughout the month. On a year-to-date basis, the Eurekahedge Fixed Income Hedge Fund Index has returned 5.47%.
- Hedge fund managers headquartered in Hong Kong have witnessed investor redemptions totalling US$0.3 billion year-to-date despite strong performance-driven gains of US$7.2 billion over the same period. The special administrative region’s stability as a financial centre came under scrutiny as the ongoing protests and social unrest continue to unnerve the markets for fear of capital outflows.
- The Eurekahedge ILS Advisers Index gained 1.46% in September, bringing its year-to-date gain to 0.83%. Despite being a calm period of insurance losses, the first half of 2019 has seen ILS hedge fund managers crippled by loss creep from past events.
- The Eurekahedge Crypto-Currency Hedge Fund Index was down 10.64% in September, outperforming Bitcoin which ended the month down 15.69%. On a year-to-date basis, crypto hedge fund managers have returned 29.39% over the first nine months of 2019.
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