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Alternative Market Briefing

Hedge funds post worst asset decline since 2008 due to performance-related losses

Wednesday, October 21, 2015

Komfie Manalo, Opalesque Asia:

The hedge fund industry experienced an asset decline in the last quarter, due to the past several months’ poor performance, which forced some funds to shut down.

Latest figures from data provider HFR showed that hedge fund assets declined by $95bn (est.) across all strategies as of end the third quarter to $2.87tln, as new capital inflows failed to offset performance-based losses.

According to the latest HFR Global Hedge Fund Industry Report, this is the first quarter since 2Q12 that hedge funds have reported an asset decline. This decline is the largest since the fourth quarter of 2008, at the height of the global financial crisis.

In the last quarter, investor inflows into hedge funds amounted to $47.9bn, which only partially offset redemptions of $42.3bn, resulting in a net inflow of $5.6bn in Q3.

Three of four main hedge fund strategy areas experienced net capital inflows for the quarter, led by Event driven funds, which received inflows of $5.4bn. Sub-strategy inflows were led by Activist and Distressed funds, with these receiving $3.6bn and $2.2bn in inflows, respectively, for the quarter.

Equity Hedge (EH) strategies lead capital inflows YTD despite net asset inflows falling in the most recent quarter, with EH receiving $2.4bn in 3Q and $23.8bn YTD.

Fixed income-based Relative Value Arbitrage (RVA) strategies experienced inflows of $2......................

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