The February 2014 Eurekahedge Report has been released. There are some very interesting stats, including one about dropping hedge fund fees. See all the stats below.

  • Hedge funds surpassed the MSCI World Index by over 3% in January, with almost 90% of fund managers outperforming underlying markets during the month
  • Fund of hedge funds outperformed underlying single managers for the first time ever, up 8.09% in 2013 – and their best performance in the last four years
  • Final figures for 2013 put the growth in global hedge fund AUM at US$240 billion – with performance-based gains and net asset inflows for the year at US$103 billion and US$137 billion respectively
  • Long/short equities hedge funds recorded their 14th consecutive month of positive net-flows, with investors allocating US$4.4 billion to the strategy in January this year
  • CTA/managed futures strategy recorded net outflows of US$7.9 billion in 2H 2013 as trend following strategies ended 2013 in negative territory
  • Developed markets investing hedge funds fared better than those focused on emerging economies, with North American, European and Japanese hedge funds delivering positive returns amid difficult market conditions
  • Emerging markets investing hedge funds outperformed the MSCI EM Index by 2.3% during the month, and by 4.9% overall in 2013
  • Distressed debt hedge funds delivered the best returns during the month – up 2.05% with theEurekahedge North America Distressed Debt Hedge Fund Index gaining 3.25% in January
  • The population of Asian hedge funds increased in 2013 with 143 launches and 108 closures – total number of funds currently stand at 1,333 managing US$146.7 billion
  • Average hedge fund fees – management and performance-based fees for new launches dropped to 1.4% and 16.0% respectively in 2013

 

Performance update

 

Hedge funds were down 0.48%[1] in January, outperforming underlying markets as the MSCI World Index declined 3.74%[2] during the month with global markets off to a bumpy start in 2014. Global markets trended downwards during the month led by weak US jobs data and discouraging PMI numbers from China. Market sentiment weakened further towards the month-end as the Fed announced another round of QE trimming which catalysed investor flight from emerging economies and led credence to concerns regarding the health of the global economic recovery. Emerging market currencies also came under sharp selling pressure with markets watching carefully as the global economy transitions to a post-QE world.

 

December 2013 and January 2014 returns across regions

 

Hedge fund fees
Hedge fund fees

Hedge funds focused on developed economies delivered positive returns during the month, led by North American fund managers who were up 0.24% – outperforming the MSCI North America Index[3] which declined 3.32% during the month. Japanese fund managers posted their fifth consecutive month of positive returns with the Eurekahedge Japan Hedge Fund Index up marginally by 0.08%, outperforming the Nikkei 225 Index which was down 8.45% as the yen strengthened 2.95% against the US dollar during the month. European hedge fund managers were up 0.10% beating underlying markets as the MSCI Europe Index[4] declined 2.06% during the month. Latin American focused hedge funds were down 1.84% though managing to outperform the MSCI EM Latin America Index[5] which plummeted 6.95% during the month. Emerging market investing hedge funds also came under pressure and ended the month in negative territory – down 1.78%. Meanwhile, Greater China investing hedge funds ended their six month winning streak reporting losses for the month of January – down 1.23% though outperforming underlying markets as the CSI 300 Index declined 5.48% during the month.

 

2013 returns across regions

 

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Hedge fund fees

 

 

Mizuho-Eurekahedge Asset Weighted Index

 

The asset weighted Mizuho-Eurekahedge Index was down 1.03% in January as some of the larger index constituents underperformed during the month. It should be noted that the Mizuho-Eurekahedge Index is US dollar denominated and as such during months of strong US dollar gains, the index results include the currency conversion loss for funds that are denominated in other currencies.

 

Index constituents focused on emerging markets suffered the largest losses as the Mizuho-Eurekahedge Emerging Markets Hedge Fund Index declined 3.65% in January. The asset weighted Mizuho-Eurekahedge Long Short Equity Hedge Fund Index was down 1.89% with funds investing with an Asia Pacific mandate declining 1.90% during the month.

 

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Hedge fund fees

Asset flows update

 

Hedge funds started off the year against the backdrop of a difficult market setting as concerns over the health of the global economic recovery resurfaced; aided by disappointing PMI numbers from China and a deteriorating situation in emerging economies as the ‘QE withdrawal symptoms’ began to manifest themselves yet again. The Eurekahedge Hedge Fund Index was down 0.48%[6] during the month, outperforming underlying markets as the MSCI World Index declined 3.74%[7] in January.

 

The industry witnessed strong growth in assets under management (AUM) in 4Q 2013, with total assets rising sharply on the back of strong performance-based gains and net inflows from investors, registering a cumulative increase in AUM of US$63.2 billion. In January there was a slight detraction from this trend as managers incurred performance-based losses of US$5.9 billion while net inflows were positive (US$1.9 billion), with the industry shedding a net of US$4.0 billion during the month. This brings the current AUM of the industry to US$2.01 trillion.

Figure 1: Summary monthly asset flow data since January 2011

 

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Hedge fund fees