Hedge Funds Lose 1.24% In May, Still Attract Capital

Jun 21 2011 | 8:42am ET

The Eurekahedge Hedge Fund Index lost 1.24% in May, but managers in all regions outperformed underlying market indices and the industry attracted capital for a sixth consecutive month.
May 2011 was the first negative month for hedge funds since June 2010, but Eurekahedge says the average returns can be considered “outperformance” given that underlying markets were down more than twice as much, with the MSCI World Index losing 2.52%.

In terms of regional mandates, most were negative for the month, but downside performance was limited to less than 2% across the regions. Latin American hedge funds were up 0.42%, significantly outperforming the MSCI EM Latin America Index which was down 3.18% in May. Long/short equity and multi-strategy funds (i.e., most of the Eurekahedge Latin American Hedge Fund Index) were up 0.54% and 0.44% respectively.

Total assets under management were down by US$5 billion, putting the overall industry at US$1.82 trillion. Performance-based losses for the month were US$13.1 billion, however, despite the high volatility environment, managers attracted net positive asset flows of US$8.1 billion, bringing the total asset flow for the year to US$113.8 billion.
Distressed debt hedge funds recorded a ninth straight month of positive returns, gaining 21.13% over this time.

Assets in global macro hedge funds assets reached a record US$122 billion.

Eurekahedge is an independent financial data and research company focusing on alternative investments. Headquartered in Singapore with a representative office in New York, it covers over 24,000 alternative funds globally.

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