Research

Asset Flows Update

The Eurekahedge Hedge Fund Index gained 1.83%1 in June, recouping the losses it suffered back in May as the global equity markets recovered during the month. Investor optimism over the progress of US-China trade talks, coupled with growing expectations of a Fed rate cut supported equity markets around the globe, with the MSCI AC World Index2 rallying 5.41% in June. Roughly 78.2% of the hedge fund managers tracked by the Eurekahedge Global Hedge Fund Database were able to generate positive returns amidst the risk-on environment during the month. On a year-to-date basis, hedge fund managers have returned 5.84%, recording their strongest 1H performance since 2009.

Final asset flow figures for May showed that hedge fund managers suffered performance-based losses totalling US$23.0 billion, as well as investor redemptions of US$3.7 billion throughout the month. Preliminary data for June revealed that the global hedge fund industry witnessed US$15.5 billion of performance-driven gains, offset by US$6.4 billion of net investor outflows. The assets under management (AUM) of the global hedge fund industry stood at US$2,294.3 billion as of June 2019. On a year-to-date basis, the industry has seen US$72.3 billion of performance growth and US$70.3 billion of investor redemptions over the first half of 2019.

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

Key highlights for June 2019:

  • The Eurekahedge Hedge Fund Index was up 1.83% in June, bringing its year-to-date return to 5.84%. Roughly 24.7% of the hedge fund managers comprising the index have recorded double-digit gains over the first half of the year.
  • The global hedge fund industry AUM has grown by US$2.0 billion as of June 2019 year-to-date. Preliminary Q2 2019 net outflows figure stood at US$23.8 billion, as investor redemptions continued to slow down. Hedge fund managers recorded US$46.4 billion and US$94.7 billion of net outflows in Q1 2019 and Q4 2018 respectively.
  • The Eurekahedge North American Hedge Fund Index was up 7.04% year-to-date, as fund managers focusing on the region benefited from the equity market rally throughout the first half of the year. The S&P 500 gained 17.35% over the first half of 2019, while the tech-heavy NASDAQ Composite was up 20.66% over the same period. North American hedge fund managers have recorded US$49.9 billion of performance growth year-to-date.
  • The Eurekahedge Greater China Hedge Fund Index gained 3.98% in June, bringing its year-to-date gain to 9.87%. Investor confidence in the US$28.5 billion mandate had remained robust with US$0.9 billion of net inflows recorded in 2018, in spite of the US$2.3 billion performance decline over the same year.
  • The Eurekahedge CTA/Managed Futures Hedge Fund Index was up 2.49% in June, with mixed returns among its underlying regional mandates. The heightened tension between the US and Iran resulted in a sharp increase in oil prices during the month, which acted as a performance contributor for CTA/managed futures hedge funds along with long positions in metals. Preliminary data showed that the strategic mandate saw US$2.3 billion of net inflows in June, the strongest monthly investor allocation since January 2018.
  • Hedge fund managers utilising fixed income strategies ended the month of June up 1.12% on the back of strong government and corporate bond markets. Growing expectations over imminent rate cuts from major central banks drove bond yields down over the month. Most notably, the US 10-year bond yield dipped to its lowest level since 2016. On a year-to-date basis, the Eurekahedge Fixed Income Hedge Fund Index has returned 5.09%.
  • The Eurekahedge ILS Advisers Index was up 0.09% in June, bringing its year-to-date loss to 1.30%. Despite being a calm period of insurance losses, the first half of 2019 has seen ILS hedge fund managers crippled by loss creep from past events.
  • The Eurekahedge Crypto-Currency Hedge Fund Index rallied 18.88% in June, recording its fifth consecutive positive month of the year. Crypto hedge fund managers benefited from the rally in crypto assets which saw Bitcoin breaching the US$12,000 level for the first time since the Q1 2018 crash. The index was up 109.46% over the first half of 2019.

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Footnote
1 Based on 43.88% of funds which have reported June 2019 returns as at 11 July 2019
2 MSCI AC World Index All Cap (Local)
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