Research

Asset Flows Update

The Eurekahedge Hedge Fund Index was up 1.06%1 in April, recording its fourth consecutive positive month of 2019. On a year-to-date basis, the index was up 5.15%, supported by the recovery in global equity and bond markets since the beginning of the year. Promising economic data, dovish central banks and optimism over the US-China trade talks over the first quarter helped fund managers recover from the losses they suffered last year. The MSCI AC World Index2 rallied 3.38% in April, supported by robust labour market data and strong earnings in the US. Despite ongoing concerns over slowing growth, China’s economy expansion over the first quarter beat estimates, supporting the region’s equity markets. However, the positive results led to unease among investors as the PBOC may decide to scale back their policy support. The majority of hedge fund managers tracked by Eurekahedge ended the month of April up, with those focusing on North America and Japan outperforming their peers. Investor allocations toward the hedge fund industry in April were counterbalanced by outflows from fund liquidations, while performance growth remained robust for the month.

Final asset flow figures for March showed that hedge fund managers generated performance-based gains totalling US$14.9 billion, offset by investor redemptions of US$22.2 billion. Following a similar trend, preliminary data for April showed that the industry saw US$15.1 billion of performance-driven gains, counterbalanced by US$1.8 billion of net investor outflows. The assets under management (AUM) of the global hedge fund industry stood at US$2,319.3 billion as of April 2019, up roughly 1.2% year-to-date, in contrast to how the industry lost 6.3% of its assets last year. On a year-to-date basis, the industry has seen US$75.2 billion of performance growth and US$48.2 billion of investor redemptions over the first four months of 2019.

Figure 1a: Summary monthly asset flow data since January 2013
 

Key highlights for April 2019:

  • The Eurekahedge Hedge Fund Index gained 1.06% in April, after recording one of its strongest Q1 returns post-crisis. On a year-to-date basis, the index was up 5.15%, and roughly 21.8% of the hedge fund managers comprising it have recorded double-digit gains over the first four months of the year.
  • The global hedge fund industry AUM has grown by US$27.0 billion as of April 2019 year-to-date. Final Q1 2019 net outflows figure stood at US$46.4 billion, just under half of the investor redemptions totalling US$94.7 billion seen in the final quarter of 2018.
  • The Eurekahedge Asia ex Japan Hedge Fund Index was up 7.87% year-to-date, supported by the recovering Asian equity markets throughout the first four months of 2019. The Asia ex-Japan mandate has witnessed US$2.4 billion of investor redemptions year-to-date, despite robust performance gains totalling US$7.6 billion over the same period.
  • North American hedge fund managers were up 1.36% in April, with the underlying long/short equities mandate up 2.07% during the month. Positive earnings surprises and ongoing dovish stance from the Fed helped renew investors’ optimism in the region’s equity market. On a year-to-date basis, the Eurekahedge North American Hedge Fund Index was up 6.73%.
  • The Eurekahedge CTA/Managed Futures Hedge Fund Indexgained 0.81% in April, with mixed returns among its constituents. Rising oil prices during the month was a major performance contributor, while slumping metal prices generated losses for some managers. The strategic mandate has seen investor redemptions totalling US$10.4 billion year-to-date.
  • The Eurekahedge ILS Advisers Index slumped 0.50% in April, bringing its year-to-date performance into the red as losses from last year’s Atlantic hurricane season continued to weigh on cat bond performance. ILS hedge fund managers suffered considerable losses from the recent hurricane seasons in 2018 and 2017, during which the index was down 3.92% and 5.60% respectively. However, investor interest level has remained robust through the recent years, with an estimated US$18.9 billion of net allocations made into the ILS hedge fund space since the beginning of 2017.
  • The Eurekahedge Crypto-Currency Hedge Fund Index gained 3.71% in April, bringing their year-to-date return up to 18.10%. Crypto hedge fund managers trailed behind Bitcoin, which rallied 26.22% in April and 33.27% throughout the first four months of 2019.

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Footnote
1 Based on 31.67% of funds which have reported April 2019 returns as at 9 May 2019
2 MSCI AC World Index All Cap (Local)
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