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Alternative Market Briefing

Market neutral equity funds posted +0.58% gains in April (+1.71% YTD), assets increase by 2.6%

Wednesday, June 01, 2011

From Precy Dumlao, Opalesque Asia:

Fund allocations into market neutral equity funds have dropped significantly this year as investor interest in the strategy fell below average, according to hedge fund data provider HedgeFund.net.

Releasing its monthly Strategy Focus Report, HFN said that the HFN Market Neutral Equity Index was slightly up in April at +0.58% (+1.71% YTD). But these returns have trailed the HFN Hedge Fund Aggregate Index by nearly half and are well below the S&P 1200 Global in 2011.

This year’s mediocre portfolio performance pales in comparison to the 2010 returns when market neutral equity (MNEq) funds posted +12.97% growth, reversing the above average rates of redemptions registered at the height of the financial crisis and the Madoff scandal.

The strong asset growth in 2010 came after investors allocated an estimated $4.8bn into MNEq strategies. This trailed only fixed income arbitrage and event driven funds among the larger strategies for the year. It is surprising that in 2011, given the economic environment, MNEq funds have not had more investor interest, the report added.

HFN estimates that total assets under management of MNEq funds were at $43.9bn (as of the end of April 2011), an increase of 2.5% (or $1.14bn). The rise in MNEq assets is consistent with global hedge fund trends as independent hedge fund data trac......................

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