Research

Asset Flows Update

Introduction

The Eurekahedge Hedge Fund Index down 0.07% in June1 while underlying markets as represented by the MSCI World Index2 gained 0.18% over the same period. Among regional mandates, Asia ex-Japan managers led the table with growth of 1.29% during the month followed by Japanese managers who were up 1.05%. Across strategies, event driven hedge funds led the table with gains of 0.79% followed by relative value hedge funds which were up 0.61%.

Final asset flow figures for May 2017 revealed that managers reported performance-based gains of US$8.3 billion while recording net asset inflows of US$18.2 billion. Preliminary data for June shows that managers have posted performance-based losses of US$7.7 billion. Preliminary net asset flows were positive in June with US$3.3 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 June 2017:

  • Hedge funds are up 3.14% for the first half of the year – almost 75% of fund managers are in positive territory year-to-date while another 18% have outperformed the MSCI AC World Index (Local). Back in 1H 2016, only 56% of the managers were in the green though 65% of managers had outperformed the MSCI AC World Index (Local).
  • Smaller funds managing assets in the range of US$100 million to US$500 million have raised almost US$20 billion this year, while the billion dollar club has accounted for US$32 billion in inflows as investors’ appetite for hedge funds continues to improve.
  • Following redemptions of US$70 billion in 2H 2016, net inflows for the first half of 2017 came in at US$56 billion. North American and European mandates accounted for US$40 billion and US$12 billion of net investor flows respectively, while emerging market mandates pulled in US$4.1 billion.
  • AUM for long/short equities hedge fund managers grew by US$23.5 billion in the first half of the year on the back of strong performance-based gains. Long/short equities hedge fund managers are up 5.24% for the year, with equity-long bias funds gaining 7.92% for the year.
  • As of June 2017 year-to-date, Asian hedge funds have recorded a growth in AUM of US$8.1 billion, with US$5.8 billion accounted for by performance-based gains while the remainder, roughly US$2.3 billion has come through net investor allocations. Asia ex-Japan managers are up 9.24% for the year with underlying Greater China and Indian managers up 12.61% and 14.99% respectively. Japan focused funds are up 4.68% over the same period.
  • The US$524.2 billion European hedge fund industry grew its AUM by US$18.3 billion as of June 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 4.14% for the year following a flat gain of 0.15% in 2016. For more details see the ‘2017 Key Trends in European Hedge Funds’ report.

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Footnote
1 Based on 50.04% of funds which have reported June 2017 returns as at 13 July 2017
2 MSCI AC World Index (Local)
 
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