Hedge Fund AUM: A summary of the performance and asset flow update from the January 2014 Eurekahedge Report.
Hedge fund AUM and performance
- Hedge fund AUM increased by almost 13% during the year to breach the US$2.0 trillion mark
- Hedge funds realized their best year of performance-based gains since 2010, raking in US$100 billion during the year, with long/short equities strategies accounting for almost half of this gain
- Net asset allocations to hedge funds stood at US$130 billion in 2013, with long/short equities managers witnessing net inflows of US$82.2 billion during the year
- European hedge fund managers were up 8.77% in 2013 with net asset inflows for the year standing at US$60.2 billion – the highest level on record
- North American long/short equities hedge funds ended the year with gains of 18.48%, with 20% of these hedge fund managers outperforming the S&P500 Index by an average of 20.52% during the year
- Asian hedge funds outperformed their global peers and were up 15.86% in 2013, with fund managers recording net asset inflows of US$11 billion during the year – the highest level on record since 2007
- Japanese hedge funds remained ahead of other regions, up 26.77% with pure Japan mandated funds recording net inflows of US$700 million since June 2013
- Greater China focused hedge funds were up 19.39% in 2013, outperforming the Hang Seng Index by more than 16%
- Distressed debt hedge funds have delivered the best returns among all strategies and were up 17.95% in 2013
Hedge Fund AUM and Performance update
Hedge funds delivered their fourth consecutive month of positive returns as global markets ended the year on a positive note. The Eurekahedge Hedge Fund Index was up 0.98% during the month while the MSCI World Index gained 1.67% in December.
Global markets digested the news of the much awaited QE tapering as the Fed reiterated its resolve to keep interest rates low in order to sustain a continued recovery in the US economy. While North American and European markets edged upwards on the news, emerging market fears over capital outflows resurfaced with the MSCI Emerging Markets Index declining 0.93% during the month. Asian markets were mixed during the month as tightening liquidity in mainland China coupled with a decline in the country’s PMI gauge dampened investor sentiment.
All major hedge fund investment regions witnessed positive returns during the month. The Eurekahedge Japan Hedge Fund Index saw the strongest gains among all regional mandates – up 2.13% in December. Japanese fund managers posted yet another month of positive returns as the Nikkei 225 Index climbed 4.02% during the month, helped by a fall in the value of the yen which depreciated 2.68% against the US dollar. North American managers were up 1.57%, (10.18% for the year) as equity markets rallied to new highs with the NASDAQ Composite (INDEXNASDAQ:.IXIC), S&P 500 (INDEXSP:.INX) and Dow Jones Industrial Average 2 Minute (INDEXDJX:.DJI) gaining 2.87%, 2.36% and 3.05% respectively during the month. European fund managers posted gains of 1.00%, ahead of the MSCI Europe Index which was up 0.88% during the month. Emerging markets focused funds were up 0.87%, with fund managers exposed to India posting gains of 2.97% and outperforming the BSE Sensex Index which was up 1.82% during the month.
Hedge Fund AUM: Mizuho Eurekahedge Asset Weighted Index
The asset weighted Mizuho-Eurekahedge Index was up 0.64% in December, and 6.44% for the year with the smaller index constituents (less than US$100 million in AUM) delivering better returns compared to their larger peers. 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 were marginally positive as the Mizuho-Eurekahedge Emerging Markets Hedge Fund Index was up 0.08% in December, down 0.15% for 2013 on the whole. Emerging markets have been in the doldrums since the start of the year as the US economy posts a recovery of sorts, with capital flight severely straining emerging market currencies. The asset weighted Mizuho-Eurekahedge Long Short Equity Hedge Fund Index was up 11.51% in 2013, with funds investing with an Asia Pacific mandate delivering strong returns during the year – up 7.98%.
Hedge Fund AUM: Eurekahedge Asset flows update
Hedge funds witnessed their fourth consecutive month of positive returns as global markets ended the year on a strong note of optimism. The Eurekahedge Hedge Fund Index was up 0.98%during the month, bringing its 2013 returns to 8.02%. Global markets welcomed outgoing Fed chairman Ben Bernanke’s commitment to a low interest rate regime in the post-QE tapering environment with the MSCI World Index gaining 1.67% in December.
The industry witnessed strong growth in assets under management (AUM) during the months of October and November, 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$53.9 billion. December saw some interesting results, although managers delivered their fourth consecutive month of performance-based gains (US$4.9 billion), net inflows were in the red with the industry shedding US$8.6 billion during the month. The total AUM of the industry increased by almost 13% during the year and currently stands at US$2.0 trillion.