Research

Asset Flows Update

Hedge funds were down 2.69%1 in September; another month of highly volatile movements and broad declines across global markets. The MSCI World Index lost nearly 10% making September the fifth consecutive month of declines for the index. In this market environment, hedge funds were able to outperform the markets substantially. Even so, downbeat investor sentiment resulted in net negative asset flows.

The total size of the industry declined by US$37 billion, bringing total assets under management (AuM) below the US$1.8 trillion mark. Performance-based losses for the month stood at US$16.5 billion, while the sector witnessed net negative asset flows of US$21 billion. As risk appetite declined over the last few months, investors started to pile up redemption requests amid fears of a double-dip recession and previous experience of gated redemptions in 2008 to 2009. The current size of the industry now stands at US$1.76 trillion.


Figure 1: Summary monthly asset flow data since December 2008

Key highlights for the month of September:

  • The Eurekahedge Hedge Fund Index registered its largest decline since October 2008

 

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Footnote

1 Based on 61.67% of funds which have reported September 2011 returns as at 17 October 2011

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