Hedge fund Assets Under Management expands at weakest pace since 2009 but managers post 7th straight month of gains
Hedge funds were up 0.50%1 during the month of September, outperforming underlying markets as represented by the MSCI AC World Index (Local) which gained 0.19% over the same period. Close to 63% of underlying constituent funds for the Eurekahedge Hedge Fund Index were in positive territory this month, with majority of them being long/short equity mandated. Japan hedge funds led performance among regional mandates this month, up 1.35% while distressed debt managers topped the table across strategies, gaining 1.07% over the same period.
As of 2016 year-to-date, hedge funds are up 3.35% with close to 15% of managers posting double digit returns compared to 14% of managers over the same period in 2015. Roughly 38% of managers posting returns in excess of 10% in 2016 year-to-date are long/short equity mandated while another 19% are CTA/managed futures mandated.
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- Hedge funds gained 0.50% during the month and are up 3.35% year-to-date. The US$2.26 trillion hedge fund industry grew by US$17.6 billion year-to-date, down from a US$93.4 billion growth over the same period in 2015. Fund liquidations outpaced new launches globally with a total of 548 closures for 500 launches as of 2016 year-to-date.
- Event driven hedge funds were up 0.54% during the month, and up 6.81% year-to-date as positions in M&A deals within the F&B, pharmaceuticals and technology sector lead performance. Roughly 18% of actively-reporting event driven hedge funds posted double digit returns as of 2016 year-to-date.
- On a year-to-date basis, North American hedge fund managers were up 5.40% while their European and Japanese counterparts were in the red ??down 0.46% and 2.93% respectively.
- The Eurekahedge Distressed Debt Hedge Fund Index posted the best returns among strategic mandates in September and was up 1.07% during the month. Managers also posted impressive year-to-date gains, up 8.66% – the best year-to-date returns for the strategy on record.
- Latin American long/short equities hedge funds posted the best year-to-date gains, up 20.42% while Japanese long/short equities hedge funds fared the worst, losing 2.98% over the year.
- Asia ex-Japan hedge fund managers gained 0.53% during the month, with strength being led by underlying Greater China and India mandated hedge funds which were up 0.73% and 1.82% respectively over the same period.
Hedge fund Assets Under Management- Regional Indices
On a year-to-date basis, distressed debt hedge funds lead the table, up 8.66% followed by event driven and relative value hedge funds which gained 6.81% and 6.21% respectively as M&A activity and current price dislocations of underlying assets present ample opportunities for managers. Given that the oil recovery remain sustainable towards Q4 2016, distressed debt hedge funds could be on track as the best performing hedge fund strategy this year.