The August 2016 Eurekahedge Report reveals that July witnessed the third consecutive months of outflows from hedge funds with investor redemptions totalling USD20.7 billion.
However, total hedge fund assets grew by USD9.1 billion over the past seven months with the industry's total assets currently standing at USD2.25 trillion. The USD800 billion long/short equity hedge fund space has seen investor redemptions of USD18.4 billion over the 3 months ending July 2016, Eurekahedge writes and the Long/Short Equity Hedge Fund Index is up 0.89 per cent for the year – the worst performer among all strategic mandates.
Total AUM in the USD532.0 billion European hedge fund industry has declined by USD9.0 billion over the last three months as investors redeemed USD10.9 billion from the industry following lacklustre returns and uncertainty in a post Brexit environment, according to Eurekahedge. Roughly 80 per cent of hedge funds posted positive returns over the three year annualised period, with close to a quarter of these managers posting double digit gains over this period.
Among developed market mandates, North American hedge fund managers lead the performance tables, up 3.87 per cent year-to-date whereas Japanese and European managers fell into negative territory, down 4.21 per cent and 1.82 per cent respectively. The USD1.5 trillion North American hedge funds sector grew by USD12.3 billion over the past seven months, with performance-based gains accounting for USD6.5 billion of this growth.
Asia ex-Japan managers were up 0.48 per cent year-to-date with the performance of underlying Greater China hedge funds down 4.70 per cent over the same period. Nonetheless, Greater China hedge fund managers beat the CSI 300 Index which was down 14.13 per cent over the past seven months, according to the firm.
CTA/managed futures hedge fund strategies lead in terms of investor allocations for the year, recording USD10.5 billion in inflows for 2016. The Eurekahedge CTA/Managed Futures Hedge Fund Index is up 4.22 per cent for the year with its sub-group of trend following strategies gaining 5.38 per cent.
Relative value hedge funds led the tables across strategic mandates in July, up 2.51 per cent. On a year-to-date basis, relative value hedge funds were up 4.88 per cent with AUM growing by USD5.1 billion over the past seven months to reach USD61.6 billion as of July 2016.
Hedge funds gained for the fifth consecutive month in July, up 1.52 per cent while underlying markets, as represented by the MSCI AC World Index (Local) gained 4.18 per cent. Eurekahedge writes that roughly 73 per cent of the underlying constituent hedge funds for the Eurekahedge Hedge Fund Index were in positive territory this month thanks to a broad-based rally in global equity markets and an improving investor risk appetite post-Brexit.
The firm writes that markets were a little perturbed by a series of central bank meetings. Bund yield barely moved after the ECB meeting left current measures unchanged, signalling that investors are still anticipating another round of ECB stimulus in the coming months. Over in Japan, Abe’s latest stimulus package and the Bank of Japan’s easing expansion lead to some USD/JPY action towards the final week of July but Yen strength had little impact on the Japanese stock markets which ended the month in positive territory. While the Fed left rates unchanged at the latest July meeting, incoming macro data could put the central bank on track for its next rate hike.
Across regional mandates, Latin American managers topped the table, gaining 4.44 per cent while relative value managers were in the lead for strategic mandates, up 2.51 per cent during the month. Exposure into equities, precious metals and energy contributed to hedge fund performance during July. On a year-to-date basis, Latin America once again led the table, up 15.82 per cent while distressed debt hedge funds led performance among strategic mandates, gaining 6.56 per cent over the same period, the firm writes.