Introduction

September continued the positive trend in the hedge fund sector for the year 2009 as the composite Eurekahedge Hedge Fund Index rose by an impressive 2.6%, ending 3Q2009 with a 6% gain. The performance gains are partly attributable to the continuing surge in the underlying markets globally, with the MSCI World Index gaining 3.9%, while managers also made strong profits in the fixed income and commodities sectors. September was the fifth consecutive month of net increase in assets under management which now stand at US$1.43 trillion, gaining approximately US$34 billion during the month.

While the performance-based gains for the month stand at US$14.2 billion, the sector saw strong positive net flows of US$15.1 billion. Coming on the back of a robust US$17.5 billion influx in August, September was the fifth straight month of positive net flows, indicating that investors are optimistic about the directions of the underlying markets and the hedge fund industry as a whole. Figure 1 shows the monthly asset flows across the hedge fund industry since the start of 2008.

Figure 1: Summary Monthly Asset Flow Data for 2008-to-date

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September also marks the end of the net redemption that was seen through end-2008 until 2Q2009. By the year-end, we would likely witness a surge in the number of new launches as evidenced by...

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