Eurekahedge: Industry AUM Contracts $12.2B in 2016 Despite +4.48% Return

Jan 17 2017 | 9:30pm ET

Assets in the hedge fund industry contracted by $12.2 billion in 2016 as persistent redemption pressures resulted in steep net outflows of $42.5 billion for the year, according to the January 2017 Eurekahedge Report

Despite the asset decline, hedge funds were up 4.48% for 2016, posting better performance compared to a modest 1.78% gain in 2015. The industry gained $80.7 billion in assets that year, Eurekahedge reports, highlighting the inherent lag that exists in allocation decisions. 

Key highlights of the new report:

  • The asset base for relative value hedge funds expanded 17.28% for the year, growing by $9.8 billion. Relative value mandated hedge funds gained 6.30% in 2016, with underlying relative value volatility hedge funds up 7.22% over the same period.
  • European hedge funds saw $24.6 billion in investor redemptions in 2016 – the largest net asset outflows on record since 2008. 
  • CTA/managed futures mandated hedge funds saw the highest net investor inflows among strategic mandates for 2016 ($12.7 billion). CTA/managed futures ended the year up 1.29% with strength led by underlying commodity-focused hedge funds, which gained 6.96% over the same period.
  • Investor redemptions hit industry heavy-weights in 2016: billion dollar hedge funds recorded $52.3 billion of net outflows whilst sub-billion dollar hedge funds saw net inflows of $9.8 billion. 
  • Asian managers saw a modest decline in assets for the year as sub-1% returns and $2.2 billion of investor redemptions weighed on industry AUM. Underlying Greater China mandated hedge funds ended the year in negative territory, declining 4.46%.
  • North American hedge funds were up 7.80% for the year, with underlying long/short equities managers appearing as bright spots for the region – gaining 9.18% in 2016. North American long/short equities hedge fund managers posted their strongest quarterly gain in Q3 2016 (+4.47%).

Founded in 2001, Eurekahedge tracks asset flows, hedge fund performance and regional key trends across the hedge fund universe. The firm's database tracks more than 130 data points on more than 24,000 alternative funds across the hedge fund universe.

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