Research

Asset Flows Update

Introduction

The Eurekahedge Hedge Fund Index lost 1.20% in January1 while underlying markets as represented by the MSCI World Index2 were down 5.71%. All regional mandates were down during the month as global equities faced intense sell-off pressure; much of the weakness in equity markets was led by Asian equities. Asia ex-Japan managers posted losses of 3.15% during the month followed by Japanese hedge funds which saw losses of 2.71%. Across strategies, CTA/managed futures hedge funds led the table with gains of 2.32% during the month while other strategies languished in negative territory.

Final asset flow figures for December revealed that managers reported performance-based losses of US$13.0 billion while recording net asset inflows of US$12.7 billion. Preliminary data for January shows that managers have posted performance-based losses of US$1.4 billion while recording net outflows of US$4.0 billion, bringing the current assets under management (AUM) of the global hedge fund industry to a total of US$2.24 trillion.

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

Key highlights for January 2016:

  • Hedge funds assets under management stand at US$2.24 trillion as at end-2015 – investor inflows account for three quarters of the industry’s US$108.7 billion asset growth in 2015.
  • Asian managers posted their weakest returns since August last year, with Greater China mandated funds down 5.76% in January while Japan dedicated funds lost 2.71%. The Asian hedge fund space expanded by US$10.7 billion in 2015 through a combination of investor flows and performance-based gains.
  • Event driven hedge funds posted the worst returns among all hedge fund strategic mandates, down 3.56% in January. North American and European event driven managers were down 5.36% and 3.14% respectively while Asian managers posted losses of 4.65% in what is turning out to be the worst month for the strategy since 2011.
  • The European hedge funds sector registered the strongest growth in AUM among all regional mandates in 2015, growing their asset base by almost 10% during the year to US$535 billion. Investor allocations to the region stood at US$ 40.5 billion, a year-on-year increase of 110%.
  • CTA/managed futures, tail-risk and long volatility were the only strategies to end the month in green with returns coming in at 2.32%, 3.53% and 2.59% respectively. For more details on volatility strategies refer to the CBOE Eurekahedge Volatility Indexes.
  • The US$80.9 billion Islamic funds industry managed to outperform the Dow Jones Islamic World Index in 2015 despite a very challenging market environment that saw a spike in investor redemptions as oil dependent economies in the Middle East call down capital in the face of worsening budget deficits. For more details refer to the 2015 Overview: Key Trends in Islamic Funds report.

The full article is available in The Eurekahedge Report accessible to paying subscribers only.

Subscribers may continue to login as usual to download the full report and non-subscribers may email database@eurekahedge.com to enquire on how to obtain the full research report.


Footnote
1 Based on 47.74% of funds which have reported January 2016 returns as at 12 February 2016
2 MSCI AC World Index (Local)
 
Chat