Research

Asset Flows Update

Introduction

The Eurekahedge Hedge Fund Index was up 0.87% in January1 while underlying markets as represented by the MSCI World Index2 gained 1.49% over the same period. Among regional mandates, Latin American managers led the table, up 3.73% during the month followed by Asia ex-Japan managers who increased by 1.93%. Across strategies, event driven hedge funds led the table with gains of 2.02% followed by long/short equities hedge funds which increased by 1.65%.

Final asset flow figures for annual year 2016 revealed that managers reported performance-based gains of US$35.1 billion while recording net asset outflows of US$55.1 billion. Preliminary data for January shows that managers have posted performance-based gains of US$1.3 billion. Preliminary net asset flows were positive in January on the heels of US$1.1 billion of inflows into North American mandates. Redemption pressure appears to have eased though a clearer picture should emerge in the coming months on the outlook for investor allocation into hedge fund regional and strategic mandates. This brings 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 2017:

  • Hedge funds started the year up 0.87% in January with managers reporting performance-based gains of US$1.3 billion. Investor subscriptions stood at US$1.2 billion during the start of the year. In annual year 2016, final asset flow figures show that manager saw redemptions totalling US$55.1 billion while performance-based gains stood at US$35.1 billion over the same period.
  • For annual year 2016, AUM for European mandated hedge funds declined 5.47% with strong redemptions of US$27.0 billion recorded – the steepest outflows for 2016 among regional mandates.
  • The US$251.1 billion CTA/managed futures mandated hedge fund industry saw the highest net investor inflows among strategic mandates for annual year 2016 (US$11.0 billion). Managers posted modest performance-driven gains totalling US$2.7 billion over the same period.
  • The US$774.0 billion long/short equities hedge fund industry recorded the steepest decline in net outflows among strategic mandates or US$29.1 billion in annual year 2016 while performance-based gains stood at US$8.7 billion over the same period.
  • Asian managers saw asset decline of US$1.8 billion for annual year 2016, with total net outflows of US$3.4 billion recorded, while performance-based gains stood at US$1.6 billion. The Asian hedge fund industry oversees 8% of total global assets, or US$169.6 billion in AUM as of 2016.
  • Long-only absolute return funds gained 7.61% in 2016, well ahead of underlying markets and hedge fund peers which were up 7.33% and 4.46% respectively. Asia is home to 43% of assets in the US$225.9 billion long-only absolute return funds industry is concentrated within the region alone.

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Footnote
1 Based on 57.61% of funds which have reported January 2017 returns as at 15 February 2016
2 MSCI AC World Index (Local)
 
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