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Industry Updates

HFN Hedge Fund Aggregate Index up 2.03% in November, +18.66% YTD, hedge fund assets increased 3.39% to $2.037tln

Wednesday, December 09, 2009
Opalesque Industry Updates - HFN released early estimates for November performance and asset flows.

Highlights:

Hedge fund assets passed the $2 trillion mark in November driven both by performance and new allocations.

  • Total assets increased 3.39% to $2.037 trillion. Assets were last above $2 trillion in November 2008.
  • Investors allocated $26.3 billion to hedge funds in November, performance increased assets an additional $40.5 billion
  • Investor flows were positive in November for the 7th consecutive month.
  • During the 7 months of consecutive investor inflows, $119.91 billion has been allocated to hedge funds.
  • The Core Growth Rate (% increase in assets due solely to investor flows) increased to 1.33% November. The rate of growth has risen two consecutive months.
  • Hedge fund assets are still $900 billion below the peak set in Q2 2008.
Hedge fund performance was positive in November, driven by commodity focused strategies and emerging markets. Equity long/short strategies appeared conservatively positioned, underperforming the S&P by more than 450 basis points.

  • The HFN Hedge Fund Aggregate Index was +2.03% in November and +18.66% YTD.

Details from November:

Assets:

  • Fixed income investments outpaced equities in November, after lagging the two prior months.
  • Investments in commodity strategies were in line with overall industry growth.
  • Flows to corporate bond related strategies turned slightly negative in November.
  • Fixed income arbitrage strategies had the fastest rate of inflow in November.
  • Allocations into emerging markets slowed for the second straight month, but were in line with overall industry growth.
Performance:

Regional/Country Specific Exposure
With the exception of funds investing in the MENA region, emerging markets again outpaced developed market exposure in November. Latin America focused funds were the best performing, led by funds investing in Brazil. India exposure produced large returns as well and Russia and China focused funds were more aligned with the overall industry.

HFN Latin America Index: +4.26% in November, +45.74% YTD
HFN Brazil Index: +5.90% in November, +52.85% YTD
HFN India Index: +4.81% in November, +47.54% YTD
HFN China Index: +1.80% in November, +36.80% YTD
HFN Russia Index: +2.19% in November, +60.82% YTD
HFN Middle East/North Africa Index: -0.89% in November, +23.00% YTD
HFN Emerging Markets Index: +2.12% in November, +40.86% YTD

Fixed Income (FI) Strategies
The average performance from fixed income focused strategies was +0.82% in November. Performance was led by distressed debt related strategies while arbitrage strategies lagged for the first month in several.

HFN Distressed Index: +2.34% in November, +26.54% YTD
HFN Fixed Income Arbitrage Index: +0.08% in November, +17.81% YTD
HFN Mortgages Index: +1.00% in November, +50.62% YTD

Equity (EQ) Strategies
The average performance from equity focused strategies was +1.23% in November. Funds investing in U.S. markets returned an average of +1.98% during the month. Overall underperformance of broad equity markets was an indication of a more defensive positioning of LS Eq portfolios. Energy and healthcare focused funds outperformed.

HFN Long/Short Equity Index: +1.43% in November, +19.84% YTD
HFN Market Neutral EQ Index: +0.07% in November, +4.48% YTD
HFN Short Bias Index: -1.80% in November, -16.65% YTD
HFN Energy Sector Index: +2.93% in November, +36.25% YTD
HFN Healthcare Sector Index: +3.71% in November, +26.03% YTD

Commodity and Foreign Exchange (FX) Related Strategies
CTAs and commodity focused managers mostly outperformed the industry in November. Energy and metals exposure produced the highest gains. Funds focusing on financial futures (EQ indices) posted returns above equity long/short managers, but still lagged major equity benchmarks by a wide margin.

HFN CTA/Managed Futures Index: +4.41% in November, +4.87% YTD
Foreign Exchange focused funds: +0.94% in November, +1.93% YTD
Financial Futures focused funds: +2.41% in November, +3.11% YTD

Corporate website: Source

- FG

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