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Other key highlights for July 2017:

- Total hedge fund assets grew by US$108.6 billion over the past seven months with US$71.6 billion attributed to investor inflows while managers posted performance-based gains of US$37.0 billion with the industry's total assets currently standing at US$2.33 trillion.

- AUM for the North American hedge fund industry has reached a record high of US$1.56 trillion. Investor allocations for 2017 year-to-date stood at US$46.5 billion, while US$19.1 billion of performance-based gains were recorded over the same period of time.

- Smaller funds managing assets in the range of US$100 to US$500 million have raised almost US$22 billion this year, while the billion dollar club has accounted for US$44 billion in inflows as investor appetite for hedge funds continues to improve.

- The US$151.5 billion arbitrage mandated hedge fund industry saw the highest net investor inflows of US$13.0 billion among strategic mandates for 2017 year-to-date. Managers posted performance-based gains as of 2017 year-to-date totalling US$3.8 billion.

- As of July 2017 year-to-date, Asian funds have recorded a growth in AUM of US$10.3 billion, with US$6.6 billion accounted for by performance-based gains while the remainder, roughly US$3.6 billion has come through net investor allocations. Asia ex-Japan managers are up 12.57% for the year - leading the table among strategic mandates with underlying Greater China and Indian managers up 18.43% and 19.31% year-to-date respectively. Japan focused funds are up 5.71% over the same period.

Commentary:

Hedge funds extended their gains for the year and were up 0.88% during the month of July based on preliminary numbers. Meanwhile, underlying markets, as represented by the MSCI AC World Index (Local), were up 1.64% over the same period. Returns were largely positive across the board with all key regional mandates in the green as emerging market mandates (excluding Eastern Europe & Russia) delivering the best returns. The US economy continues to march along at a steady pace, with a weakening USD and the gain in oil prices spurring inflation expectations and making a stronger case for a Fed rate hike later this year. However, the political deadlock in Congress; where President Trump still appears to have his hands tied to push through with his reform agenda (the recent sanctions against Russia which Trump approved quite begrudgingly being a recent case in point); as well as the upcoming fiscal debt ceiling are likely to force the Fed to pursue its rate hike more cautiously in the second half of 2017. Over in Europe, the growth momentum appears to be going strong with a strengthening Euro adding to gains for foreign investors in the region. Emerging markets (EM) led by India, China and Brazil have also contributed to strong gains for hedge fund managers as global risk appetite remains strong with a weakening USD favouring exposure to EM markets where valuations remain relatively cheap.

All regional mandates were up in July with Latin American managers a clear lead among peers, up 3.68%, followed by Asia ex-Japan managers who were up 2.45% over the same period - their seventh consecutive month of gains. Japanese managers were up 0.76%, followed by North American and European managers who posted gains of 0.72% and 0.15% respectively. On a year-to-date basis, Asia ex-Japan managers led the tables once again, up 12.57% followed by Latin American and Japanese managers, with 10.49% and 5.71% respectively. European and North American managers also posted positive returns with gained of 4.08% and 3.41% respectively year-to-date.

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