Research

Asset Flows Update

Introduction

The Eurekahedge Hedge Fund Index was up 0.33% in May1 while underlying markets as represented by the MSCI World Index2 gained 1.09% over the same period. Among regional mandates, Japanese managers led the table, up 1.58% during the month followed by Asia ex-Japan managers who were up 0.93%. Across strategies, event driven hedge funds led the table with gains of 0.71% followed by long/short equities hedge funds with gains of 0.49%.

Final asset flow figures for April 2017 revealed that managers reported performance-based gains of US$6.9 billion while recording net asset inflows of US$5.4 billion. Preliminary data for May shows that managers have posted performance-based gains of US$6.0 billion. Preliminary net asset flows were positive in May with US$4.9 billion of inflows into the industry. Redemption pressure appears to have eased going into 2017 as positive sentiment surrounding North American mandates has buoyed allocation activity into hedge funds. This brings the current assets under management (AUM) of the global hedge fund industry to a total of US$2.30 trillion.

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

 

Key highlights for 2017:

  • Hedge funds were up 0.33% in May with 2017 year-to-date gains coming in at 3.28%. Investor appetite for hedge funds has picked up pace since the start of the year, with net inflows of US$39.0 billion for the year following redemptions of US$55.1 billion in 2016.
  • AUM for the North American hedge fund industry has reached a record high of US$1.55 trillion as of May 2017. Since the Trump win in November last year, North American mandates have recorded a growth in AUM of US$56.3 billion – US$39.5 billion accruing from performance-based gains while US$16.8 billion from net investor allocations.
  • AUM for long/short equities hedge fund managers grew by US$19.1 billion over the year with strength led by performance-based gains of US$23.6 billion. Long/short equities hedge fund managers are up 4.99% for the year.
  • As of May 2017 year-to-date, Asian funds have recorded a growth in AUM of US$6.6 billion, with US$5.1 billion accounted for by performance-based gains while the remainder, roughly US$1.5 billion has come through net investor allocations. Asia ex-Japan managers are up 7.91% for the year with underlying Greater China and Indian managers up 10.80% and 15.35% respectively. Japan focused funds are up 3.13% over the same period.
  • The US$516.4 billion European hedge fund industry grew its AUM by US$10.5 billion as of May 2017 year-to-date, following a steep contraction in AUM of US$29.3 billion in 2016. Managers investing with a dedicated European mandate are up 4.25% for the year following a flat gain of 0.19% in 2016.
  • Sub-billion dollar hedge funds recorded strong investor interest as of 2017 year-to-date, with net inflows totalling US$16.2 billion. Within sub-billion dollar hedge funds, mid-size funds managing between US$100 million and US$500 million have seen inflows of US$14.3 billion. In contrast billion dollar hedge funds have pulled in US$22.8 billion in new investor money this year.

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Footnote
1 Based on 48.26% of funds which have reported May 2017 returns as at 14 June 2017
2 MSCI AC World Index (Local)
 
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