It seems that everyone loves to hate hedge funds. It seems that the past two years there’s been nothing but negative news flow from the sector, and financial commentators have attacked the industry for its high fees, poor returns and lack of originality.
Some large institutional money managers have also exited their hedge fund investments adding fuel to the speculation that the industry’s very survival is under threat.
However, according to data compiled by Singapore-based Eurekahedge, the hedge fund industry still seems to be going strong and is gathering more assets — something that usually goes unreported in the media.
Hedge funds: Still growing, not dying out
According to Eurekahedge’s June hedge fund report, as of H1 2016, hedge fund industry assets under management rose by $19.9 billion, which compares with the growth of $93.4 billion and $15.3 billion over the first and second half of 2015 respectively. The total AUM for the global hedge fund industry currently stands at $2.26 trillion and as of 1H 2016. For the sector as a whole during the first half of 2016, investor inflows of $25.1 billion offset performance driven losses of $5.2 billion.
These figures show that investors haven’t given up on the hedge fund industry just yet although Eurekahedge’s numbers do show that fund liquidations have outpaced launches for both the first and second quarter of 2016.
A total of 372 hedge funds have closed year-to-date and in Europe, closures have outpaced launches for six consecutive quarters. A total of 484 hedge funds have liquidated since 2015 and investors have redeemed for $4.4 billion from the European hedge fund industry over the past two months.
As Bloomberg reports, European hedge funds have struggled this year thanks to wide stock swings, a commodity sell-off, and divergent monetary policies. The Eurekahedge European Hedge Fund Index lost almost 3% this year through June, its worst first half on record (the index was first compiled in 1999).
Meanwhile, North American hedge fund managers were the best performers of the first half, up 2.8% for the six months to June. North American hedge fund managers saw the highest invest allocations of $12.2 billion across regional mandates.
Long/short equity hedge funds lost 0.96% during the first quarter with sub-group index the Eurekahedge Equity Long Bias Hedge Fund Index down 2.86%. Unfortunately, long/short equity hedge fund managers have posted performance-based losses of $7.8 billion in the first half of 2016, compared to gains of $17.3 billion 2015 as a whole.
CTA/managed futures funds appear to be the most popular hedge funds according to Eurekahedge, topping the tables across strategic mandates for June and 1H 2016, up 3.3% and 4.3% respectively. Net inflows into the strategy have come in at $7.2 billion the first half of 2016, down from $24.2 billion for the same period in 2015. The Eurekahedge Trend Following Index, a sub-group of the broad CTA/managed futures index was up 5.96% during the month.