The Eurekahedge Hedge Fund Index was up 1.85%1 in August, bringing its year-to-date return to 3.79% and its five-month trailing return to 12.85% since end-March. Hedge fund managers benefitted from the robust performance of the global equity market as represented by the MSCI ACWI (Local) which gained 5.54% over the month. Risk assets reacted positively to the encouraging development of the COVID-19 vaccine and improving macroeconomic data. In the US, the deceleration of the spread of COVID-19 and the Fed's announcement on adopting a new inflation framework that could keep its policy rate lower for a longer period boosted the region's equity market during the month. The tech-heavy NASDAQ was up 9.59%, while the S&P 500 gained 7.20% in August. In the same vein, supported by the strong PMI numbers of the leading EU countries, particularly Germany and France, the region's equity market rose higher, with DAX and CAC 40 up 5.13% and 3.42%, respectively. Over in Asia, Japanese equities outperformed their peers, with TOPIX and Nikkei 225 up 8.16% and 6.59% respectively, compared to the 2.67% and 1.71% return of Shanghai and Shenzhen Composite.
Final asset flow figures for July showed that hedge fund managers recorded performance-based gains totalling US$9.6 billion and net investor allocations of US$8.3 billion throughout the month. Preliminary data for August estimates that the global hedge fund industry witnessed US$31.8 billion of performance-driven gains combined with US$23.4 billion of net investor inflows. The assets under management (AUM) of the global hedge fund industry stood at US$2,181.4 billion as of end-August 2020. The global hedge funds industry has seen US$55.7 billion of performance-based decline and US$65.6 billion of investor redemptions over the first eight months of 2020.
Figure 1a: Summary monthly asset flow data since January 2013
Key highlights for August 2020:
- Global hedge funds recorded their best five-month performance of 12.85% in August after they suffered from their worst quarterly performance of 8.02% in Q1 2020. In terms of year-to-date return, the Eurekahedge Hedge Fund Index was up 3.79%, with around 22.5% of hedge funds managers posting double-digit returns over the first eight months of the year.
- Assets under management for the global hedge funds industry have rebounded, increasing by US$142.8 billion over the five-month period ending August 2020. This has come from performance driven gains of US$122.5 billion and net investor flows of US$20.3 billion. This marks a sharp recovery following US$264.1 billion asset decline in Q1 2020.
- The Eurekahedge North American Hedge Fund Index was up 2.39% during the month, bringing their five-month trailing return to 15.74% since end-March, which marks the best five-month performance of the index since inception. In contrast, their European counterparts as captured by the Eurekahedge European Hedge Fund Index generated 10.12% return over the five-month period ending month of August.
- The Eurekahedge Greater China Hedge Fund Index was up 1.94% in August, bringing their five-month performance to 28.33% since end-March. In the same vein, the total AUM of the region also grew by 31.3% since end-March from US$38.5 billion to US$50.5 billion, primarily driven by performance-based growth which accounts for US$11.2 billion from its total increase of US$12.0 billion.
- The Eurekahedge Long Short Equities Hedge Fund Index was up 2.87% in August, bringing its year-to-date return to 4.97%. More than half of its constituents have outperformed the MSCI ACWI (Local) and around 26.7% of them generated a double-digit return over the first eight months of the year.
- The Eurekahedge Macro Hedge Fund Index was up 1.23% in August, bringing its year-to-date return to 6.01%. Macro hedge funds exhibited a strong comeback from their worst quarterly performance in Q1 2020 as seen from their five-month trailing return of 9.72% since end-March, which was their best five-month performance since 2003.
- Hedge funds utilising structured credit strategies were up 2.16% during the month, extending their five-month trailing return to 15.82% since end-March as captured by the Eurekahedge Structured Credit Hedge Fund Index. The Fed adopted a new framework called ‘average inflation targeting’, which is expected to result in keeping its policy rate lower for a longer period that may support the fund manager’s future performance.
- Fund managers focusing in cryptocurrencies were up 8.70% over the month, outperforming Bitcoin's performance with its 4.84% return. In terms of year-to-date return, the Eurekahedge Crypto-Currency Hedge Fund Index was up 65.88% as of August 2020 compared to the 60.76% of Bitcoin over the same period, while the top three performing funds of the index generated a year-to-date return in excess of 110%.
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