Hedge funds are up 7.27 per cent for the year, posting better performance compared to a modest 3.68 per cent gains last year, according to Eurekahedge’s final monthly report for 2017.
Asset base for the industry grew by USD188.2 billion in 2017, with USD94.7 billion of the gains in assets attributed to investor inflows and USD93.5 billion attributed to performance-based gains. This compares with an AUM contraction of USD20.0 billion in 2016 where investor redemptions stood at USD55.1 billion while performance-based gains came in at USD35.1 billion.
Almost 76 per cent of hedge fund managers have posted positive returns in 2017, their highest proportion on record since 2013. Around 29 per cent of the managers have posted gains exceeding 10 per cent this year while around 6 per cent of the managers have posted losses exceeding 10 per cent.
Fund closures continued to outpace launch activities for the second consecutive year with 490 funds liquidating in 2017 whilst the number of startups for the year stood at 451. Asia and North America have seen a net growth in fund population while Europe witnessed a decline for the third year running.
Asia ex-Japan investing funds have delivered the best returns globally and were up 19.89 per cent for the year. Assets managed by Asia-ex-Japan grew by USD19.8 billion year-to-date with USD6.2 billion attributed to investor inflows and USD13.6 billion attributed to performance-based gains. Within the region, Greater China mandated hedge funds were up 28.27 per cent for the year, outperforming the CSI 300 Index by 7.24 per cent.
North American hedge funds were up 5.66 per cent year-to-date and have received the highest investor allocations among all regional mandates with inflows of USD58.1 billion. This compares to redemptions totalling USD11.1 billion over the same period last year. On the other hand, investor allocations into Europe stood at USD23.4 billion as of 2017 year-to-date.
Average performance and management fees charged by new hedge funds launched in 2017 stood at 17.11 per cent and 1.26 per cent respectively, this compares with figures of 16.52 per cent and 1.41 per cent for 2016.
Relative value hedge funds posted the best returns among all strategic mandates during the month, up 0.89 per cent with their assets grew USD5.9 billion for the year, with underlying relative value volatility hedge funds posting impressive gains of 8.62 per cent in 2017 outperforming other volatility-focused hedge funds.
Distressed debt managers posted their sixth consecutive month of redemptions, totalling USD2.0 billion, the only strategy that posted redemptions for the year while recording modest performance-based gains of USD1.5 billion. Total AUM for the strategy has declined by almost USD0.51 billion year-to-date.
Average performance and management fees charged by new launches in Europe this year stood at historic lows, with average performance fees of 14.04 per cent being recorded while average management fees were down to 1.15 per cent. The USD545.6 billion European hedge fund industry grew by USD39.7 billion for the year. For details refer to the European Hedge Fund Key Trends Report December 2017.
