Research

Asset Flows Update

After growing consistently for six months, hedge fund assets under management declined by US$2.85 billion in January 2010 as global markets went through some mid-month volatility. The Eurekahedge Hedge Fund Index was down by 0.86%1; however, this can be considered as an outperformance as most market indices registered declines ranging from 3% to 9%. The MSCI World Index was down 4.2% amid concerns over the global economy and health of the financial sector.

The decrease in assets under management came mainly from performance-based losses while asset flows remained flat to slightly positive for the month across the industry. Mid-month reversals in market trends left some managers facing negative performances for January which resulted in net losses of US$3 billion. The market volatility also caused a spike in risk aversion, leading investors to hold off their allocations; however, the net flow of assets was slightly positive for the month with net subscriptions of US$0.1 billion.

Figure 1 shows the monthly asset flows across the hedge fund industry since the end of 2007.

Figure 1: Summary Monthly Asset Flow Data for 2009

Click on the image for an enlarged preview

Below are the highlights for the month of January:

  • Hedge funds outperformed underlying markets in January 2010, losing 0.86% while global markets were down 3% to 9%.
  • Latin American hedge funds witnessed 15 straight months of back-to-back gains, up 29.38% since October 2008; European investing hedge funds posted...

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Footnote

1Based on 79.78% of the funds reporting their January 2010 performances as at 23 February 2010.

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