Research

Asset Flows Update

Introduction

The Eurekahedge Hedge Fund Index lost 0.70% in December1 while underlying markets as represented by the MSCI World Index2 were down 2.23%. The performance of regional mandates was mixed during the month with Asia ex-Japan managers leading the table with gains of 1.45% followed by Japanese managers up 0.27%. Meanwhile the performance of European managers was flat, while Latin American and North American hedge funds languished, down 0.56% and 0.94% respectively during the month.

Final asset flow figures for November revealed that managers reported performance-based gains of US$10.6 billion while recording net asset outflows of US$4.1 billion. Preliminary data for December shows that managers have posted performance-based losses of US$4.2 billion while recording net inflows of US$9.0 billion, bringing the current assets under management (AUM) of the global hedge fund industry to a total of US$2.25 trillion, with annual asset growth totalling US$113.8 billion as of December 2015.

Figure 1a: Summary monthly asset flow data since January 2012
 

Key highlights for December 2015:

  • Investor allocations drive hedge fund AUM growth in 2015 despite lacklustre returns of 1.45% - the lowest since 2011. Net investor allocations for the year came in at US$77.0 billion, more than twice the US$34.8 billion in inflows recorded in 2014.
  • Asia ex-Japan investing funds have delivered the best returns globally and are up 8.23% in 2015. Assets managed by Asia ex-Japan grew by US$10.7 billion for the year with US$5.6 billion attributed to investor inflows and US$5.1 billion attributed to performance-based gains. Within the region, Greater China mandated hedge funds are up 11.07%, outperforming the CSI 300 Index by 5.49%.
  • North American hedge funds post their worst performance since 2008, down 0.55% in 2015. Despite this muted performance, investor inflows for 2015 into the region stood at US$38.2 billion, twice the US$18.8 billion recorded in 2014.
  • European hedge funds recorded the strongest growth in AUM among all regional mandates in 2015, with total AUM growing by 9.14% in 2015 to come in at a record high of US$531.3 billion.
  • Multi-strategy hedge funds have grown their asset base by 12% in 2015, recording their highest level of investor inflow on record since 2007, with net investor allocations worth US$21.8 billion. Total AUM for multi-strategy hedge funds stand at US$370.7 billion, the highest level on record.
  • Billion dollar hedge funds saw their asset grow by US$69.0 billion in 2015, with US$44.4 billion of the gain in assets attributed to investor inflows. This compares with net investor allocations of US$10.27 billion and US$126.91 billion in 2014 and 2013 respectively. Billion dollar funds have accounted for almost 73% of investor allocations into hedge funds since 2013.

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Footnote
1 Based on 52.99% of funds which have reported December 2015 returns as at 14 January 2016
2 MSCI AC World Index (Local)
 
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