Fri, May 27, 2016
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. Performance - Hedge fund ETFs take a battering, Have long-short credit funds delivered?[more]

    Hedge fund ETFs take a battering From ETFStrategy.co.uk: It was a blow for the hedge fund world when Hillary Clinton’s son-in-law Marc Mezvinsky announced he would be closing his Greek-focused fund after it plummeted in value by 90%, just two years after it launched. For passive investor

  2. Ares Capital to buy American Capital in $3.4 billion deal[more]

    From PIOnline.com: Ares Management's business development company Ares Capital Corp. is buying troubled BDC American Capital for $3.43 billion, said a joint news release by the BDCs and another release by Ares Management. Ares Capital Corp.'s assets are expected to grow to about $13.2 billion when t

  3. Launches - Man Group and American Beacon launch new emerging debt fund, Nikko AM launches new Japan equity UCITS fund[more]

    Man Group and American Beacon launch new emerging debt fund American Beacon Advisors, an experienced provider of investment advisory services to institutional and retail markets, launched the American Beacon GLG Total Return Fund today. The Fund became effective May 20. The America

  4. Emerging markets hedge funds perform strongly, but capital base erodes[more]

    Komfie Manalo, Opalesque Asia: Latin American Emerging Markets and Russian hedge funds lead industry gains in the first months of 2016, posting strong performances through April as global and EM equity, commodity and currency markets surged in recent weeks following steep losses to begin the year

  5. Americas - Australian banks sending U.S. hedge funds broke, Ryan Puerto Rico ‘rescue’ bill could be windfall for hedge funds[more]

    Australian banks sending U.S. hedge funds broke From SMH.com.au: US hedge funds are not having the best of years. Profits are hard to find, they're underperforming and the punters are losing patience, withdrawing US$15 billion ($20.8 billion) in the March quarter. They're expected to wit