Research

Asset Flows Update

Introduction

The Eurekahedge Hedge Fund Index gained 0.36% in February1 while underlying markets as represented by the MSCI World Index2 declined 1.43% over the same period. Among regional mandates, Japanese managers posted the steepest loss down 3.83% during the month followed by Asia ex-Japan hedge funds which saw losses of 1.78%. Across strategies, CTA/managed futures hedge funds led the table with gains of 2.62% propped up by exposure into safe haven assets such as gold and the Bund.

Final asset flow figures for January revealed that managers reported performance-based losses of US$11.9 billion while recording net asset outflows of US$9.2 billion. Preliminary data for February shows that managers have posted performance-based losses of US$4.7 billion while recording net inflows of US$5.6 billion, bringing the current assets under management (AUM) of the global hedge fund industry to a total of US$2.22 trillion.

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

Key highlights for February 2016:

  • Hedge funds are down 1.27% as of February 2016 year-to-date with total AUM declining by US$20.1 billion. Almost 65% of fund managers are in the red for the year in what is turning out to be a tough start to the year for fund managers.
  • Asia ex-Japan managers were in the red for their second consecutive month - down 1.78%, bringing their 2016 year-to-date returns down 6.84% which is their worst start to the year on record. Weaknesses were led by Greater China and India dedicated mandates which are down 8.54% and 9.15% respectively year-to-date
  • Latin America is the only region to post positive year-to-date gains, up 1.90% as the brief rally in oil and commodities propped up the region’s performance especially in February. Latin American hedge fund managers also led the tables during the month, up 2.14%.
  • On a year-to-date basis, CTA/managed futures hedge funds are in the lead with gains of 4.29% while long/short equities hedge funds posted the steepest decline, down 4.08% over the same period. This compares to losses of 1.05% for CTA/managed futures hedge funds and gains of 2.94% for long/short equities hedge funds respectively in 2015.
  • European managers posted their third consecutive month of losses, down 3.28% since December, translating into performance-based losses of US$8.2 billion for managers. Investor flows over the last 12 months stand at US$41.5 billion.
  • Strong investor inflows were recorded over the past year for the US$1.48 trillion North American hedge funds industry – investor allocations for 2015 were twice the level of inflows seen in the year before. For more details, please refer to the ‘2015 Overview: Key Trends in North American Hedge Funds’ report.

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Footnote
1 Based on 44.41% of funds which have reported February 2016 returns as at 10 March 2016
2 MSCI AC World Index (Local)
 
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