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In the week ending November 27th 2020, Preqin reported that hedge fund assets under management (AUM) have finally surpassed pre-COVID-19 levels, pushing to a new industry high of $3,696bn. This record figure can primarily be attributed to improved performance in September (+5.17%, as measured by the Preqin All-Strategies Hedge Fund Benchmark) compared to the YTD return of +5.01%.

Despite this pike in performance, hedge fund industry flows reversed course in September 2020 as the industry's $2.8 billion in redemptions ended a three-month inflow trend. The industry had brought in $5.6 billion in new assets in August. September's outflows represented 0.1% of industry assets, according to the Barclay Fund Flow Indicator published by BarclayHedge.

Several hedge fund strategies have momentum biases, in particular L/S Equity, and CTAs. Because this rotation took place in a bullish environment, most hedge fund strategies ended the week in positive territory, said Lyxor. Directional L/S Equity (+1.2%) benefitted from their market beta, but alpha contributed negatively for all but those strategies with an explicit value bias. One strategy benefitted particularly from the changing market landscape: Special Situations (+3%). In relative terms, their higher market beta and value bias were supportive.

In the meantime, Emerging Markets (EM) hedge funds, particularly those investing in China, extended YTD gains into 4Q20 as EM hedge fund capital reached a new record, driven by gains ......................

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