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Asia Pacific Intelligence

Eurekahedge reports hedge funds up 0.71%in March, 2.98% year to date with Japanese hedge funds up 10.78% in the first quarter

Thursday, May 09, 2013

The Eurekahedge Hedge Fund Index was up 0.71% during March, against the MSCI World Index return of 1.76%.

Key highlights for March 2013 included:

  • Early reports indicate positive asset flows to hedge funds in March; 1Q 2013 witnessed positive asset flows of US$20 billion
  • Japanese hedge funds witnessed the strongest quarter on record, up 10.78% in 1Q 2013
  • Launch activity picks up in 2013 with nearly 200 funds launched so far in the year
  • Asia ex-Japan and European hedge funds outperformed underlying markets by 2.3% and 0.41% respectively
  • Distressed debt and event driven were the best performing strategies in 1Q 2013, up more than 5% each year-to-date

Eurekahedge reports that the asset-weighted Mizuho-Eurekahedge Asia ex-Japan Index grew 6.35% in the first quarter of 2013.

Regionally, Eurekahedge reports that North America witnessed a continuation of the rally in equity markets amid positive economic data, while Japanese stocks also extended their winning run with further devaluation of the yen. European markets underperformed during the month as concerns over the region's sovereign debt situation resurfaced due to Cyprus' banking crisis and questions over its bailout.

The firm writes: "Returns were mixed among the various hedge fund regions with Japanese managers posting the strongest returns during the month. The Eurekahedge Japanese Hedge Fund Index increased 3.57% in March as the Tokyo Topix gained 6.05%. Bond prices also rallied amid higher trending equity indices as the new Bank of Japan governor is expected to continue the monetary easing policy. Some managers also reported gains from the weakening Japanese yen during the month, although the rate of depreciation slowed down at the month's end amid concerns over European debt which sent some foreign capital into the currency."

North American managers posted returns of 1.06% in March as the equity markets maintained their upward momentum during the month. The S&P 500 reached a record high as positive data on employment and the housing sector provided support for equities. Asia ex-Japan managers also delivered gains of 0.77% in March, outperforming the underlying markets by 2.3% - the MSCI Asia ex Japan Index dropped 1.52% during the month. European managers also outperformed the underlying markets although the Eurekahedge Europe Hedge Fund Index witnessed a loss of 0.20% in March.

In terms of strategy, Eurekahedge found that all strategic mandates finished the month with positive returns, with event driven and distressed debt managers posting the strongest gains. "Increasing corporate action including IPO volume and acquisition activity in the first quarter has been favourable for event driven managers. The Eurekahedge Event Driven Hedge Fund Index grew 2.90% in March, bringing its 1Q 2013 return to a strong 5.10%. Despite increasing risk aversion in Europe, distressed debt funds continued their strong run for the year with gains of 1.72% in March. Managers were able to post gains from a rebounding housing market in the US as well as corporate issuances. The BofA Merrill Lynch High Yield Index4 was up 1.03% during the month."

Among other strategies, long/short equity managers continued to deliver profits for the 10th consecutive month with gains of 1.01% in March. The mid-month volatility and divergent trends in global indices were helpful for relative value managers who posted returns of 1.04%. CTA/managed futures funds also posted positive returns of 0.45% with some managers reporting gains from the energy sector.

(This piece first appeared in Opalesque's AMB in April.)

This article was published in Opalesque's Asia Pacific Intelligence our monthly research update on alternative investments in the Asia-Pacific region.
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