Wednesday, 30 July 2014
Last updated 5 hours ago
Jan 10 2012 | 8:03am ET
Hedge funds ended 2011 down 4.16%—the second worst yearly return on record—according to the Eurekahedge Hedge Fund Index, having wound up a difficult year by shedding 0.21% in December
That said, hedge funds—particularly the big ones—managed to outperform underlying markets. The capital-weighted Mizuho-Eurekahedge Top-100 Index was up 2.01% in 2011, while the MSCI World Index was down 0.4% in December and 9.9% for the year.
Total asset flows for 2011 were US$67 billion, which means the entire industry is now worth US$1.72 trillion. And the struggles of existing hedge funds did nothing to discourage the launch of new ones—2011 saw over 1,100 launches, another second-highest total. That said, capital raising remains difficult.
From a regional perspective, Latin American hedge funds provided the best returns for the year: up 2.84%. During the month of December, Latin American funds delivered positive returns (0.65%) but were outstripped by Japanese funds, which posted gains of 1.17% (although for the year, they were down 1.09%). Asia ex-Japan funds were down 1.32% in December and finished the year with negative returns of 12.85%.
As for strategies, fixed income and arbitrage were the best performing of the year— up 1.19% and 0.71%, respectively. For the month of December, fixed income funds added 0.22% while arbitrage funds gained 0.14%. Distressed debt funds turned in the best performance for the month, adding 1.34%, abetted by year-end risk-on trades—the BofA Merrill Lynch High Yield Index was up 2.48% in December. Distressed debt funds were down 2.69% for the year. CTA/managed futures funds gained 0.40% in December, to finish the year with a decline of 3.04%.
Long/short equities turned in the worst performance of the month, losing 0.73% to end the year with a loss of 7.43%. Macro strategies shed 0.49% for the month ended the year down 2.19%. Multi-strategy funds shed 0.18% in December ending 2011 down 2.51% while relative value funds lost 0.18% in December for a full-year loss of 2.51%.
Long-only absolute return funds chalked up their fourth annual decline in 2011, down 13.63% for the year.
As for assets, relative value hedge funds saw the largest percentage increase (year on year) in AUM, gaining 20% in 2011 while CTA/managed futures funds and macro hedge funds attracted the most money from investors—US$19 billion and US$16 billion, respectively, in net positive asset flows.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…