The Eurekahedge Hedge Fund Index ended 2019 up 8.74%, recording its strongest annual performance since 2013. The global hedge fund industry has been supported by the global equity market rally on the back of the de-escalation of the US-China trade war and accommodative central bank policies. Positive geopolitical developments surrounding the trade war and Brexit have also sustained investors’ risk sentiment over the last quarter of the year. Returns were positive across regions, with Asia ex-Japan fund managers returning 2.58% in December, on the back of the region’s equity market rally. Fund managers focusing on Asia ex-Japan were up 12.03% over the year, outperforming their North American peers who returned 9.32% over the same period.
Final asset flow figures for November showed that hedge fund managers recorded performance-based gains totalling US$9.6 billion, offset by investor redemptions totalling US$3.1 billion throughout the month. Preliminary data for December estimated that the global hedge fund industry witnessed US$17.0 billion of performance-driven gains and US$5.1 billion of net investor inflows. The assets under management (AUM) of the global hedge fund industry stood at US$2,302.2 billion as of end-2019. On an annual basis, the industry has seen US$136.1 billion of performance growth and US$126.2 billion of investor redemptions.
Figure 1a: Summary monthly asset flow data since January 2013
Key highlights for December 2019:
- The Eurekahedge Hedge Fund Index returned 8.74% in 2019, supported by the risk-on sentiment among investors and positive geopolitical developments throughout the year. Roughly 44.6% of the hedge fund managers comprising the index have recorded double-digit gains over the year.
- The global hedge fund industry AUM has has increased by US$9.9 billion in 2019. Investor redemptions totalling US$126.2 billion have been recorded throughout the year, a level the industry has not seen post-crisis.
- The Eurekahedge North American Hedge Fund Index was up 9.32% throughout 2019, as fund managers focusing on the region benefited from the equity market rally throughout the year. The S&P 500 has gained 28.88% during the year, while the tech-heavy NASDAQ Composite was up 35.23% over the same period. North American hedge fund managers have recorded US$94.8 billion of performance growth year-to-date.
- The Eurekahedge Greater China Hedge Fund Index ended 2019 up 16.83% on the back of the region’s underlying equity market rally. The US$29.4 billion mandate has seen US$2.0 billion of performance growth, offset by US$0.3 billion of investor redemptions over the year.
- The Eurekahedge Long Short Equities Hedge Fund Index was up 11.25% in 2019, as they benefited from the robust equity market rally throughout the year, which resulted in double-digit gains for the MSCI ACWI (Local). The strategic mandate has seen US$70.1 billion of performance growth year-to-date, counterbalanced by US$71.8 billion of investor outflows.
- The Eurekahedge Fixed Income Hedge Fund Index has returned 7.73% throughout 2019, supported by major central bank policies which pushed yields lower throughout the year. The US 10-year treasury yield briefly dipped below the 1.50% mark in early September, which was the lowest level it has reached since Q3 2016.
- The Eurekahedge ILS Advisers Index ended 2019 up 1.43%, in contrast to how the index was down 3.92% and 5.60% in 2018 and 2017 respectively as ILS fund managers bore the brunt of the catastrophic Atlantic hurricane seasons during those years. Despite being a comparatively calm period of insurance losses, the year 2019 has seen some ILS fund managers comprising the US$89.3 billion industry crippled by loss creep from past events.
- The recently launched Eurekahedge Structured Credit Hedge Fund Index tracks the performance of 76 active structured credit hedge funds collectively managing US$60.6 billion. The index has returned 8.12% throughout 2019, and recorded an exceptional Sharpe ratio of 2.98 over the 3-year period ending December 2019.
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