Research

Asset Flows Update

Introduction

The Eurekahedge Hedge Fund Index grew 1.03% in December1 while underlying markets as represented by the MSCI World Index2 were up 2.38% over the same period. Among regional mandates, North American managers led the table, up 1.22% during the month followed by European managers with 1.07%. Across strategies, event driven hedge funds were in the lead with 1.65% gains followed by macro hedge funds with 1.32%.

Final asset flow figures for November revealed that managers reported performance-based losses of US$0.8 billion while recording net asset outflows of US$15.0 billion. Preliminary data for December shows that managers have posted performance-based gains of US$12.2 billion while recording net outflows of US$7.6 billion, bringing the current assets under management (AUM) of the global hedge fund industry to a total of US$2.23 trillion.

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

 

Key highlights for 2016:

  • Hedge funds were up 4.48% for 2016, posting better performance compared to a modest 1.78% gain over 2015. Asset base for the industry contracted US$12.2 billion in 2016, on the back of steep redemption pressure with net outflows totalling US$42.5 billion for the year.
  • Asset base for relative value mandated hedge funds expanded 17.28% for the year, growing by US$9.8 billion. Relative value mandated hedge funds gained 6.30% in 2016, with underlying relative value volatility hedge funds up 7.22% over the same period.
  • European hedge funds saw US$24.6 billion in investor redemptions in 2016 – the largest net asset outflows on record since 2008.
  • CTA/managed futures mandated hedge funds saw the highest net investor inflows among strategic mandates for 2016 (US$12.7 billion). CTA/managed futures ended the year up 1.29% with strength led by underlying commodity-focused hedge funds which gained 6.96% over the same period.
  • Investor redemptions hit industry heavy-weights in 2016: billion dollar hedge funds recorded US$52.3 billion of net outflows whilst sub-billion dollar hedge funds saw net inflows of US$9.8 billion.
  • Asian managers saw a modest decline in assets for the year as sub-1% returns and US$2.2 billion of investor redemptions weighed on industry AUM. Underlying Greater China mandated hedge funds ended the year in negative territory, declining 4.46%.
  • North American hedge funds were up 7.80% for the year, with underlying long/short equities managers appearing as bright spots for the region – gaining 9.18% in 2016. North American long/short equities hedge fund managers posted their strongest quarterly gain in Q3 2016 (+4.47%).

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Footnote
1Based on 45.90% of funds which have reported December 2016 returns as at 12 January 2016
2 MSCI AC World Index (Local)
 
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