Hedge funds started off the year against the backdrop of a difficult market setting as concerns over the health of the global economic recovery resurfaced; aided by disappointing PMI numbers from China and a deteriorating situation in emerging economies as the ‘QE withdrawal symptoms’ began to manifest themselves yet again. The Eurekahedge Hedge Fund Index was down 0.48%1 during the month, outperforming underlying markets as the MSCI World Index declined 3.74%2 in January.
The industry witnessed strong growth in assets under management (AUM) in 4Q 2013, with total assets rising sharply on the back of strong performance-based gains and net inflows from investors, registering a cumulative increase in AUM of US$63.2 billion. In January there was a slight detraction from this trend as managers incurred performance-based losses of US$5.9 billion while net inflows were positive (US$1.9 billion), with the industry shedding a net of US$4.0 billion during the month. This brings the current AUM of the industry to US$2.01 trillion.
Figure 1: Summary monthly asset flow data since January 2011
Key highlights for January 2014:
- Hedge funds surpassed the MSCI World Index by over 3% in January, with almost 90% of fund managers outperforming underlying markets during the month.
- Fund of hedge funds outperformed underlying single managers for the first time ever, up 8.09% in 2013 - and their best performance in the last four years
- Final figures for 2013 put the growth in global hedge fund AUM at US$240 billion – with performance-based gains and net asset inflows for the year at US$103 billion and US$137 billion respectively.
- Long/short equities hedge funds recorded their 14th consecutive month of positive net-flows, with investors allocating US$4.4 billion to the strategy in January this year.
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1Based on 48.19% of funds which have reported January 2014 returns as at 13 February 2014
2 MSCI AC World Index (USD)