November 2014 hedge fund stats via Eurekahedge

  • Hedge funds are up 3.45% year-to-date with roughly 18% of funds boasting double digit returns for the year, half the number for the same period last year.

 

  • Total net asset flows for 2014 were trimmed to US$55 billion for the year as hedge funds saw their fourth consecutive month of net outflows in October, with investors redeeming US$20.3 billion over the last four months.

 

  • CTA/managed futures funds reported performance-based gains of US$12.3 billion for the year; their highest October year-to-date gains since 2010. North American CTAs lead with year-to-date returns at 8.04%.

 

  • Asia ex-Japan focused funds grew their asset base by US$11.2 billion in 2014, and are up 7.44% October year-to-date, outperforming the MSCI Asia ex Japan by almost 300 basis points.

 

  • India investing hedge funds reported their ninth consecutive month of positive returns with managers deploying long/short equities up 47.30% year-to-date – outperforming the BSE Sensex by almost 16%.

 

  • European managers continued to face headwinds, down 0.56% for the month and 0.60% year-to-date; though the region’s specialist distressed debt investing funds are up 12.77% for the year.

Performance update

 

Hedge funds registered their second consecutive month of losses in October, closing the month down another 0.27%1, underperforming underlying markets as the MSCI World Index2 gained 1.15% after a wild month. Concerns about global growth prospects amid a deflationary environment prompted a rise in investor risk aversion in the earlier half of October, sparking a global sell-off which drove the S&P 500 Index briefly into correction territory, with US 10-year treasury yields dipping below 2%. However, the market subsequently made a sharp recovery in the latter half of the month, lifted by a positive slew of economic data including strong corporate earnings and GDP numbers. Even as the Federal Reserve officially ended its quantitative easing programme this month, central banks elsewhere remain committed to tackling deflation. The ECB maintained its firm stance on an expansionary fiscal policy as growth and inflation in the region remained weak, while the Bank of Japan (BoJ) surprised financial markets with the magnitude of its quantitative easing, causing the yen to weaken further against the greenback.

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Asia ex-Japan managers were the best performers during the month, returning 0.93% as markets in Greater China advanced on hopes that Chinese authorities will soon ease monetary conditions in a bid to engineer a soft landing for the economy. Latin American funds were also up 0.19% as Latin America’s biggest economy, Brazil, pared gains towards the end of the month when President Dilma Rousseff overcame her pro-business rival by a narrow margin to win the elections.

 

The Eurekahedge North America Hedge Fund Index lost 0.14% despite the US S&P 500 Index gaining 2.32%, bolstered by recent positive US economic data, rising consumer confidence, falling jobless claims and expansionary PMI numbers – putting the US on track towards rate normalisation given its employment and inflation targets. The same scenario happened for Japanese managers, who lost 0.47% even as the benchmark Nikkei 225 index closed October up 1.49% as the BoJ announced an expansion of its monetary base, with momentum further building as the US$1.2 trillion Japan Government Pension Investment Fund (GPIF) announced of an increase in its allocation towards equities.

 

On a year-to-date basis, Asia ex-Japan managers lead the table with returns of 7.44%, attributing much of their gains to exposure to Indian equities, which has risen 31.62%3 since the start of the year. Funds with a North American and Latin American mandate came in second and third place, delivering returns of 5.08% and 3.38% respectively. Japan focused funds returned 3.05% while European managers came in last place at 0.60%.

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Mizuho-Eurekahedge Asset Weighted Index

 

The asset weighted Mizuho-Eurekahedge Index was down slightly in October at 0.08%. The top 100 constituents performed somewhat better with their smaller counterparts, gaining 0.17% in comparison. 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. The US dollar appreciated 1.16% in October, based on the US dollar Index.

The asset weighted Mizuho-Eurekahedge Asia Pacific Hedge Fund Index gained 0.10% as Greater China equities saw good gains during the month, with the CSI 300 Index up 2.20%, though strong gains in the US dollar proved a drag on performance. As at October 2014 year-to-date, the Mizuho-Eurekahedge Asia Pacific Hedge Fund Index has gained 3.58%, outperforming the MSCI Asia Pacific Index4 by over 3%.

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