Sat, Feb 25, 2017
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. Legal - Fannie, Freddie shares dive after U.S. appeals court ruling[more]

    From Reuters.com: Shares of Fannie Mae and Freddie Mac tumbled more than 30 percent on Tuesday after a U.S. appeals court shut down efforts by hedge funds and other investors to pursue numerous legal claims accusing the U.S. government of seizing their profits following taxpayer bailouts. By a

  2. Institutional investors plan to raise allocations to alternative assets in 2017[more]

    Komfie Manalo, Opalesque Asia: A survey by Context Summits Miami showed that nearly 72% of institutional investors and family offices plan to raise their allocations to alternative asset managers this year, suggesting continued strong demand for the industry. "As many large, brand name f

  3. Comment - Mortgages, mergers and hedge fund fees, Fairholme's Berkowitz responds to court ruling against hedge fund suits of Fannie Mae[more]

    Mortgages, mergers and hedge fund fees From Bloomberg.com: Yesterday the U.S. Court of Appeals for the D.C. Circuit handed down an odd decision in a lawsuit over the government's nationalization of Fannie Mae and Freddie Mac. The key issue is what's called the "Third Amendment," the 2012

  4. Investing - Hedge funds continue to chase the herd in record Momentum wager, Marshall Wace bets grocer Sainsbury may need rights offering, Hedge fund net exposure has started to retreat, David Tepper's Appaloosa fund makes a huge buy, The 10,000-mile journey to Short Australia, Skeptical hedge fund investors grill Evan Spiegel about Snap's I.P.O.[more]

    Hedge funds continue to chase the herd in record Momentum wager From Bloomberg.com: Hedge funds can't get enough of momentum - even if it means embracing an investing strategy they hate. Loosely defined as betting on shares that went up the fastest over the preceding nine-to-12 months, h

  5. Opalesque Exclusive: Swiss investors take fund seeding and acceleration into their own hands[more]

    Benedicte Gravrand, Opalesque Geneva: Banque Bonhote, a 200-year old Swiss private bank, last year launched a community of investors - heads of Swiss family and advisory offices and wealth managers - with the aim of co-investing in the kind of managers they wanted to invest in, either by way of s