Research

Asset Flows Update

Introduction

The Eurekahedge Hedge Fund Index was up 0.63% in June1 while underlying markets as represented by the MSCI World Index2 fell 1.38% over the same period. A weak global macroeconomic outlook coupled with strong headwinds in the aftermath of Brexit proved to be a challenging environment for managers. Among regional mandates, Latin American managers were the top gainers, up 4.17% during the month followed by North American managers who gained 1.02%. Across strategies, CTA/managed futures hedge funds led the table with gains of 3.30% followed by multi-strategy hedge funds which were up 0.73%.

Final asset flow figures for May revealed that managers reported performance-based gains of US$5.4 billion while recording net asset outflows of US$0.8 billion. Preliminary data for June shows that managers have posted performance-based gains of US$7.9 billion while recording net outflows of US$3.5 billion, bringing the current assets under management (AUM) of the global hedge fund industry to a total of US$2.26 trillion.

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

Key highlights for June 2016:

  • Total hedge fund assets grew by US$19.9 billion for 1H 2016 with US$25.1 billion attributed to investor inflows whereas managers saw performance-driven losses of US$5.2 billion. Fund liquidations have outpaced launches for both quarters of 2016, with a total of 372 funds closing to date.
  • CTA/managed futures funds topped the tables across strategic mandates for June and 1H 2016, up 3.30% and 4.33% respectively. As of 1H 2016, net inflows into the strategy have come in at US$7.2 billion, down from US$24.2 billion over the same period in 2015. The Eurekahedge Trend Following Index, a sub-group of the broad CTA/managed futures index was up 5.96% during the month.
  • Closures outpaced launches for six consecutive quarters for the European hedge fund industry – with a total of 484 funds liquidating since 2015. Investor have redeemed US$4.4 billion from the industry over the past two months. More on the European hedge fund industry is available in this month’s Key Trends in European Hedge Funds report.
  • Among developed mandates, North American hedge fund managers were the best performers as of 1H 2016, up 2.80% year-to-date. North American hedge funds received the highest year-to-date allocations among all regional mandates with inflows of US$12.2 billion. This is compared to US$30.0 billion over the same period last year. On the other hand, Japanese managers were the worst performers during the month, down 2.43% as Abe mulls helicopter money.
  • Long/short equity hedge funds lost 0.96% as of 1H 2016, with sub-group index the Eurekahedge Equity Long Bias Hedge Fund Indexdown 2.86% over the same period. Managers have posted performance based losses of US$7.8 billion in the first half of 2016, which compares with gains of US$17.3 billion for the annual year 2015.
  • The Eurekahedge UCITS Hedge Fund Index was up 1.91% over the three year annualised period, compared to the Eurekahedge ex-UCITS Hedge Fund Index which gained 3.87% over the same period; a deficit of almost 200 basis points in performance for the added liquidity. For more details please refer to the Key Trends in UCITS Hedge Funds report.
  • The Eurekahedge FX Hedge Fund Index is up 5.48% over a five year annualised basis, and posted gains of 0.10% in June as managers posted gains on G-10 and emerging currency pairs trading. For more details click here.

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Footnote
1 Based on 47.89% of funds which have reported June 2016 returns as at 13 July 2016
2 MSCI AC World Index (Local)
 
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