Key highlights for February 2015:

  • Hedge funds grew their asset base by over US$30 billion in the first two months of 2015 as investors allocated US$12.3 billion in February alone.
  • Europe investing funds have delivered the best returns globally and are up 2.29% for the month, led by Eastern Europe focused funds which gained 12.49%.
  • CTA/managed futures funds have reported asset inflows of US$6.3 billion for February year-to-date, reversing a trend of nearly uninterrupted outflows since 2H 2013.
  • North America mandated hedge funds have grown their asset base by US$235 billion since the start of 2013, accounting for roughly 67% of all global assets into hedge funds. For more details please view our ‘2014 Overview: Key Trends in North American Hedge Funds’ report.
  • Event driven funds have reported performance-based gains of US$1.6 billion during the month, corresponding to returns of 2.90%, the highest out of all strategic mandates.

Hedge funds extended their gains in the second month of 2015, returning 1.57%[1], although falling behind underlying markets as the MSCI World Index[2] was up 5.47%. Global equity markets rose in unison during February with a return of investor risk appetite as the market downplayed fears of contagion from a possible ‘Grexit’; further supported by accommodative monetary policies from central banks around the world. Volatility faded away along with increased investor confidence and rising equity markets with the CBOE VIX falling from 20.97 to 13.34. The Federal Reserve was seen to be coming under increasing pressure to raise interest rates given the strengthening US economy, though Yellen currently appears content to adopt a ‘wait and see’ approach of preferring to raise rates too late rather than too early, which helped to send US equity markets into record territory once again. Meanwhile, the Greek situation was still at an impasse, although it managed to avoid a short-term default by securing a four month extension of the current bailout programme while negotiations continue.

Hedge funds

European managers were the best performers during the month, returning 2.29%. European equities were a major winning theme during the month as the MSCI Europe Index[3] rose 6.09%, fuelled by the European Central Bank’s massive asset purchase program of 60 billion euros a month which is set to begin in April. North American funds were also up 2.06%, although falling behind the S&P 500 which gained 5.49% in February. Similarly, funds focused on Latin America and Asia ex-Japan gained 1.77% and 1.65% respectively following strong performance in underlying regional markets. Japanese managers reported gains of 1.23%, trailing the Nikkei 225 which climbed 6.36% on the back of ongoing quantitative easing and a weak yen.

In terms of 2015 year-to-date returns, European managers lead the table with returns of 3.47%, attributing much of their gains to the aggressive monetary easing by the European Central Bank to reach their inflation and unemployment targets. Funds with an Asia ex-Japan and North American mandate came in second and third place, delivering returns of 2.80% and 1.69% respectively. Japan focused funds returned 0.24% while Latin America managers came in last place at 0.15%.

Hedge funds

Hedge Funds: Mizuho-Eurekahedge Asset Weighted Index

The asset weighted Mizuho-Eurekahedge Index gained 1.03% in February with the top 100 constituents performing slightly poorer than their smaller counterparts, up 0.74% 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 another 0.52% in February, based on the US dollar Index.

The asset weighted Mizuho-Eurekahedge Emerging Markets Hedge Fund Index gained 1.00% in February, breaking a losing streak that had lasted for five months. Emerging markets mandates reported profits as gains in oil prices and risk assets as a whole caused the MSCI Emerging Markets Index[4] to gain 2.88%. The Mizuho-Eurekahedge Long/Short Equity Index gained 1.93% during the month, also lifted by strong performance in underlying global equity markets.

Hedge funds

The asset weighted Mizuho-Eurekahedge Index gained 1.03% in February with the top 100 constituents performing slightly poorer than their smaller counterparts, up 0.74% 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 another 0.52% in February, based on the US dollar Index.

The asset weighted Mizuho-Eurekahedge Emerging Markets Hedge Fund Index gained 1.00% in February, breaking a losing streak that had lasted for five months. Emerging markets mandates reported profits as gains in oil prices and risk assets as a whole caused the MSCI Emerging Markets Index[5] to gain 2.88%. The Mizuho-Eurekahedge Long/Short Equity Index gained 1.93% during the month, also lifted by strong performance in underlying global equity markets.

Hedge funds

 

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