Sun, Feb 14, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Hedge fund industry posts 4th worst performance quarter in history, reducing assets to $1.97tln says HFR

Wednesday, October 19, 2011
Opalesque Industry Update – Hedge funds posted the fourth worst quarterly performance in industry history in 3Q11, as a combination of uncertainty regarding the European sovereign debt crisis and weakening economic data contributed to volatility across equity, credit, commodities and currencies. These performance declines reduced total hedge fund industry capital by $85 billion, according to today’s release of the HFR Global Hedge Fund Industry Report: 3Q11. The asset decline ends two consecutive quarters in which total capital under management eclipsed new record levels, and brings total hedge fund industry AUM to $1.97 trillion. The HFRI Fund Weighted Composite Index declined by -6.2 percent for the quarter, wiping out a small 1H11 gain and bringing year to date (YTD) performance for the broad based composite to a decline -5.4 percent.

Despite performance based declines, investors continued to allocate new capital to the hedge fund industry, with 3Q net inflows totaling $8.7 billion. This marks the ninth consecutive quarter in which the industry has experienced net inflows from investors and brings the YTD inflow total to $70.1 billion. Investors exhibited preferences for certain strategies, allocating $8.5 billion of new capital to Relative Value Arbitrage funds, bringing YTD inflows in Relative Value to over $30 billion. Macro funds experienced a net outflow of $3 billion, despite posting a narrow performance gain of +0.6 percent in 3Q. However, Macro has been in favor with investors throughout 2011, with nearly $20 billion of inflows YTD. In contrast, Equity Hedge funds, which comprise nearly thirty percent of all industry capital, experienced $2.7 billion in net inflows for the quarter, despite posting a performance decline of -10.4 percent. Credit-sensitive Event Driven (ED) funds, which declined by -7.3 percent in the quarter, experienced a net inflow of less than $500 million; ED funds have received less than $10 billion in new capital in the first three quarters of 2011, the lowest by strategy area.

In total, 61 percent of all hedge funds experienced outflows for the quarter, while 39 percent experienced inflows. Of these, approximately 20 funds experienced inflows of greater than $500 million in 3Q, while nearly 25 funds experienced outflows of greater than $500 million.

“The third quarter presented an extremely challenging performance environment, with asset volatility in many respects on par with financial crises in 2008 and 1998,” said Kenneth J. Heinz, President of HFR. “However, as investor risk aversion increased across all asset classes, hedge fund investors have maintained a critical but forward-looking disposition, reinforcing their commitments to preferred strategy areas and core funds, and positioning their allocations to benefit from opportunities created by current dislocations and volatility.”

(press release)


HFR (Hedge Fund Research, Inc.) is the global leader in the alternative investment industry. Established in 1992, HFR specializes in the areas of indexation and analysis of hedge funds. HFR Database, the most comprehensive resource available for hedge fund investors, includes fund-level detail on historical performance and assets, as well as firm characteristics on both the broadest and most influential hedge fund managers. www.hedgefundresearch.com

BG

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Investing - Real estate secondaries sole 'bright spot' in 2015, As hedge funds stumble, one firm prepares to buy illiquid stakes[more]

    Real estate secondaries sole 'bright spot' in 2015 From IPE.com: The secondary market for property was the sole “bright spot” over the course of 2015, as hedge fund secondaries saw deals fall by two-thirds, according to a wide-ranging survey of the market. Setter Capital said 2015 saw th

  2. Asia - Hedge fund manager Kyle Bass estimates China's foreign reserves below critical level[more]

    From Nasdaq.com: Investor Kyle Bass stepped up his attack on China's currency, arguing in an investor letter distributed Wednesday that the second-largest economy's foreign reserves are "already below a critical level." The comments mark the latest effort by hedge funds and other investors to raise

  3. Investing - Some hedge funds want to make subprime auto loans next big short, 11 hedge funds that are “all in” on the FANG stocks, Hedge funds short London luxury homes, Cynet raises $7 million from U.S. hedge fund[more]

    Some hedge funds want to make subprime auto loans next big short From Bloomberg.com: A group of hedge funds, convinced they have found the next Big Short, are looking to bet against bonds backed by subprime auto loans. Good luck finding a bank willing to do the trade. Money manage

  4. Investing - Hedge funds see selloff in European bank stocks as buying opportunity[more]

    From WSJ.com: The massive selloff in European bank stocks and bonds is overdone and presents a “phenomenal” buying opportunity, according to some of Europe’s top hedge-fund managers. Despite a 28% slump in European bank stocks this year, including a 38% fall in Deutsche Bank AG and a 34% drop in Soc

  5. Legal - Carlyle accused of fraud by ex-employee, Hedge funds win CDS breach of contract suit against Deutsche Bank, Hedge fund asks for OK on $27.5m Goldman CDO deal, SFO examines Barclays hedge fund profits[more]

    Carlyle accused of fraud by ex-employee From AI-CIO.com: A former portfolio manager claims he was fired for blowing the whistle on “crazy” and “irresponsible” investments. Carlyle Group has been sued by a former portfolio manager for one of its hedge funds, who accused the firm of “knowi