Tue, Sep 30, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Morningstar reports hedge fund performance for January, asset flows through December

Tuesday, February 21, 2012
Opalesque Industry Update: Morningstar, Inc. (NASDAQ: MORN), a leading provider of independent investment research, today reported preliminary hedge fund performance for January 2012 as well as estimated asset flows through December 2011. The Morningstar MSCI Composite Hedge Fund Index, an asset-weighted composite of nearly 1,000 hedge funds in the Morningstar database, increased 1.9% in January, but fell short of the MSCI World NR Stock Index's 5.0% rise. This marks the hedge fund index's largest monthly gain since December 2010.

"Overall most hedge fund strategies provided positive returns in January but trailed the large gains seen across equity markets," said Mallory Horejs, alternative investments analyst at Morningstar. "Long/short equity strategies were best positioned to participate in these rallies and delivered the month's highest increases."

The Morningstar MSCI Security Selection Hedge Fund Index, which includes long/short equity funds investing across all geographic regions, rose 3.6% in January. Better-than-expected macroeconomic data from the United States and China as well as improved liquidity in the European banking system, fueled an equity market rebound globally.

Long/short equity strategies focusing on emerging markets posted the largest monthly gains. The Morningstar MSCI Emerging Markets Hedge Fund Index rose 4.4%, but still lagged the MSCI Emerging Market Stock Index's 11.3% climb. Improving investor confidence as well as strong manufacturing and employment data from Germany helped European markets to shrug off lingering sovereign debt issues. The Morningstar MSCI Europe Hedge Fund Index and MSCI Europe Stock Index increased 3.0% and 4.7%, respectively.

In the United States, strategies focused on smaller-capitalization stocks outperformed as risky assets benefited the most from improving market sentiment. The Morningstar MSCI Small Cap and North America Hedge Fund Indexes increased 4.4% and 2.7%, respectively. The Russell 2000 and S&P 500 Stock Indexes, by comparison, jumped 7.1% and 4.5%, respectively. This represents the S&P 500 Index's strongest January performance in more than a decade.

Bond prices also rose in January on news that the Federal Reserve would extend its near-zero interest rate policy until the end of 2014. The Morningstar MSCI Specialist Credit Hedge Fund Index, which includes funds that lend to credit-sensitive issuers, increased 2.5% against the BarCap Global High Yield Index's 3.7% climb. The Morningstar MSCI Fixed Income and Morningstar MSCI Long-Short Credit Hedge Fund Indexes also posted gains, increasing 1.9% and 1.8%, respectively.

Only two hedge fund indexes tracked by Morningstar declined in January. The Morningstar MSCI Currencies Hedge Fund Index slipped 0.1% for the month, as some trading strategies struggled with the intra-month reversal of the euro. Short sellers also failed to deliver in the bullish equity market environment and the Morningstar MSCI Short Bias Hedge Fund Index tumbled 6.2%.

Hedge funds in Morningstar's database leaked $2.7 billion in December, the largest outflows seen since July 2009. Hedge funds overall experienced a turbulent fourth quarter—investors pulled $2.3 billion from funds in the database in October but then poured $1.2 billion back in during November. During 2011 overall, investors added $17.2 billion to hedge funds in Morningstar's database. The bulk of those assets went to systematic futures funds, which netted $15.3 billion throughout the year.

Event-driven hedge funds received the most redemptions in December, with the category experiencing outflows of $1.1 billion. This marks the sixth straight month of outflows for the strategy. Funds in the U.S. long/short equity and convertible arbitrage categories also experienced sizeable outflows, losing $668 and $240 million, respectively. Only five of the 21 hedge fund categories enjoyed inflows in December, the largest of which was the long/short debt category, which netted $364 million.

Funds of funds in Morningstar's database also suffered from massive redemptions, leaking $3.1 billion in December. This marks the largest monthly outflow seen in nearly three years, since April 2009. Investors pulled out $8.1 billion overall from funds of funds during 2011.

January returns for the Morningstar MSCI Hedge Fund Indexes and December asset flows are based on funds that reported as of February 14, 2012. Hedge fund investors, managers, consultants, and advisors can access additional information through Morningstar DirectSM, the company’s global research platform for institutions.

Morningstar

Press Release

BM

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. Socially responsible investments grow in demand, but performance questions persist[more]

    Komfie Manalo, Opalesque Asia: A study by financial services firm TIAA-CREF showed that interest in socially responsible investing (SRI) is increasing rapidly, but investors are still asking if investing in an SRI strategy

  2. Regulatory - Ireland launches structure for passporting loan origination funds within EU[more]

    From Asiaasset.com: The Irish Funds Industry Association (IFIA) has introduced new loan origination capabilities that will offer Asian managers and investors a new structure under the European Union’s (EU’s) Alternative Investment Fund Managers Directive (AIFMD). The new structure will allow the mar

  3. Europe - Ed Miliband's war on hedge funds could damage City of London[more]

    From Telegraph.co.uk: Ed Miliband’s plans to wage war on hedge funds could be potentially more damaging to the City of London than even the financial transaction tax (FTT), senior banking sources warned on Tuesday night. The Leader of the Opposition took aim at a number of industries as part of his

  4. News Briefs - SEC probes Pimco ETF over pricing irregularities, BEPs: Action plan released and UK first to adopt country-by-country reporting[more]

    SEC probes Pimco ETF over pricing irregularities The Securities and Exchange Commission is investigating Pimco’s pricing of exchange traded funds, the latest cloud to hang over the world’s largest bond manager, which has been dogged by poor performance and management infighting. Pimco on

  5. CalPERS’ move might alter hedge fund fees for good[more]

    Benedicte Gravrand, Opalesque Geneva: When CalPERS, the California Public Employees’ Retirement System, announced on September 15th that it was unwinding its hedge-fund portfolio, it was seen by many as is a significant blow to the sector’s appeal. The Fund is