Despite Weak Returns, Hedge Fund Strong Inflows Continue

eurekahedge asset flows 0514 Hedge funds

Hedge funds had their second straight month of losses in April, though industry-wide assets under management continued to grow due to strong inflows. The Eurekahedge Hedge Fund Index lost 0.13%, but is still up 0.78% for the year, just ahead of the MSCI World’s 0.75% YTD growth. Net assets inflows of $13.2 billion overshadowed $2.7 billion in performance-based losses, pushing AUM to $2.09 trillion, according to a Eurekahedge Report released today.

Hedge funds continue to outperform in North America, Europe stumbles

Hedge funds with a North American mandate outperformed other regions by a fair margin, gaining $1.4 billion, and tied Europe for the highest net inflows with $4.7 billion. Europe was the worst performing region, with performance losses hitting $1.1 billion, but it still has the second highest YTD returns (0.76% compared to 2.2% for North America). Both Japan and Asia ex-Japan were flat in April performance wise and had nearly flat inflows, picking up $100 million in each region.

Latin America returned $200 million but also had $200 million net outflows, leaving total assets unchanged. This could simply be a sign that investors are happy with the amount of exposure they have to Latin America and have decided to take profits when returns are positive.

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Hedge Fund Long/short loses big in April

Long/short strategies were the only category to lose money in April, but their $2.9 billion drop was enough to wipe out gains for the rest of the industry. Europe and Asia ex-Japan were hardest hit, losing 1.10% and 1.06% respectively. Nonetheless, long/short strategies had the second highest inflows at $3.8 billion. Fixed income had an impressive $6 billion in net inflows last month with $300 million in returns, making it the biggest AUM gainer in April. The second biggest gainer were multi-strategy funds that had both $1.8 billion in returns and $1.9 billion in net inflows.

While distressed debt was nearly flat, gaining 0.01%, it was also the strategy’s tenth consecutive month of positive returns putting them up 3.05% for the year. Macro is the only strategy that is down for the year, losing 1.04%. A $500 million gain in April wasn’t enough to counteract $1 billion in outflows as investors lose some faith in macro.

Event driven funds were up 1.48% in Asia ex-Japan, 0.75% in North America, and 0.56% in Europe, but big losses in Japan and Latin America meant that the strategy only picked up $300 million worldwide compared to $1.4 billion in outflows.

eurekahedge flows by strategy 0514 Hedge funds


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About the Author

Michael Ide
Michael has a Bachelor's Degree in mathematics and physics from Boston University and Master's Degree in physics from University of California, San Diego. He has worked as an editor and writer for several magazines. Prior to his career in journalism, Michael Worked in the Peace Corps teaching math and science in South Africa.

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