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Hedge fund AUM expands at weakest pace since 2009 but managers post 7th straight month of gains

Tuesday, October 11, 2016
Opalesque Industry Update - Hedge funds were up 0.50% during the month of September, outperforming underlying markets as represented by the MSCI AC World Index (Local) which gained 0.19% over the same period. Close to 63% of underlying constituent funds for the Eurekahedge Hedge Fund Index were in positive territory this month, with majority of them being long/short equity mandated. Japan hedge funds led performance among regional mandates this month, up 1.35% while distressed debt managers topped the table across strategies, gaining 1.07% over the same period.

As of 2016 year-to-date, hedge funds are up 3.35% with close to 15% of managers posting double digit returns compared to 14% of managers over the same period in 2015. Roughly 38% of managers posting returns in excess of 10% in 2016 year-to-date are long/short equity mandated while another 19% are CTA/managed futures mandated.

Below are the key highlights for the month of September 2016:

  • Hedge funds gained 0.50% during the month and are up 3.35% year-to-date. The US$2.26 trillion hedge fund industry grew by US$17.6 billion year-to-date, down from a US$93.4 billion growth over the same period in 2015. Fund liquidations outpaced new launches globally with a total of 548 closures for 500 launches as of 2016 year-to-date.
  • Event driven hedge funds were up 0.54% during the month, and up 6.81% year-to-date as positions in M&A deals within the F&B, pharmaceuticals and technology sector lead performance. Roughly 18% of actively-reporting event driven hedge funds posted double digit returns as of 2016 year-to-date.
  • On a year-to-date basis, North American hedge fund managers were up 5.40% while their European and Japanese counterparts were in the red down 0.46% and 2.93% respectively.
  • The Eurekahedge Distressed Debt Hedge Fund Index posted the best returns among strategic mandates in September and was up 1.07% during the month. Managers also posted impressive year-to-date gains, up 8.66% - the best year-to-date returns for the strategy on record.
  • Latin American long/short equities hedge funds posted the best year-to-date gains, up 20.42% while Japanese long/short equities hedge funds fared the worst, losing 2.98% over the year.
  • Asia ex-Japan hedge fund managers gained 0.53% during the month, with strength being led by underlying Greater China and India mandated hedge funds which were up 0.73% and 1.82% respectively over the same period.

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