Research

The Eurekahedge Hedge Fund Index ended 2019 up 8.67%, recording its strongest annual performance since 2013 on the back of the de-escalation of the US-China trade war and accommodative central bank policies. Going into 2020, hedge fund managers returned 0.14%¹ in January, outperforming the MSCI ACWI (Local) which slumped 0.90% over the month following the COVID-19 outbreak in China. Despite liquidity injection by the People’s Bank of China and the reduction of tariffs on US imports, investors remained concerned on the impact of the epidemic on the global economic outlook. Returns were mixed across regions in January, with Asia ex-Japan fund managers returning 0.93%, ahead of their peers focusing on North America, who ended the month down 0.11%. Long/short equities fund managers were down 0.35% in January as the weak equity market performance throughout the latter half of the month weighed on their returns.

Final asset flow figures for December showed that hedge fund managers recorded performance-based gains totalling US$18.8 billion, on top of net investor allocations totalling US$3.8 billion throughout the month. Preliminary data for January estimated that the global hedge fund industry witnessed US$1.6 billion of performance-driven gains and US$0.4 billion of net investor inflows. The assets under management (AUM) of the global hedge fund industry stood at US$2,304.6 billion as of end-January 2020. On an annual basis, the industry had seen US$137.8 billion of performance growth and US$127.5 billion of investor redemptions throughout 2019.

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

Key highlights for January 2020:

• The Eurekahedge Hedge Fund Index returned 8.67% in 2019, supported by the risk-on sentiment among investors and positive geopolitical developments throughout the year. Roughly 37.6% of the hedge fund managers comprising the index have recorded double-digit gains over the year.

• The global hedge fund industry AUM had increased by US$10.3 billion in 2019. Investor redemptions totalling US$127.5 billion have been recorded throughout the year, a level the industry has not seen after the global financial crisis.

• The Eurekahedge North American Hedge Fund Index was up 9.06% throughout 2019, as fund managers focusing on the region benefited from the equity market rally throughout the year. The S&P 500 has gained 28.88% over the year, while the tech-heavy NASDAQ Composite was up 35.23% over the same period. North American hedge fund managers had recorded US$94.9 billion of performance growth in 2019.

• The Eurekahedge Greater China Hedge Fund Index ended 2019 up 16.04% on the back of the region’s underlying equity market rally. The US$30.3 billion mandate has seen US$2.7 billion of performance growth, offset by US$0.3 billion of investor redemptions over the year.

• The Eurekahedge Long Short Equities Hedge Fund Index was up 11.24% in 2019, as they benefited from the robust equity market rally throughout the year, which resulted in double-digit gains for the MSCI ACWI (Local). The strategic mandate had a slow start in 2020, as equity fund managers slumped 0.35% in January on the back of weak global equity market performance.

• The Eurekahedge Fixed Income Hedge Fund Index returned 7.94% throughout 2019, supported by major central bank policies which pushed yields lower throughout the year. Fixed income fund managers gained 0.82% in January as investors sought safe haven assets following the COVID-19 outbreak.

• The Eurekahedge ILS Advisers Index which represents fund managers primarily exposed to non-life risks ended 2019 up 0.92%, in contrast to how the index was down 3.92% and 5.60% in 2018 and 2017 respectively as ILS fund managers bore the brunt of the catastrophic Atlantic hurricane seasons during those years. In contrast, ILS fund managers with significant life risk exposure ended the year up 7.65%.

• The Eurekahedge Crypto-Currency Hedge Fund Index was up 22.29% in January, supported by the strong performance of Bitcoin which ended the month up 31.63%. Fund managers focusing on crypto-currencies gained 16.41% throughout 2019.

The full article is available in The Eurekahedge Report accessible to paying subscribers only.

Subscribers may continue to login as usual to download the full report and non-subscribers may email database@eurekahedge.com to enquire on how to obtain the full research report.