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Global equities rallied earlier into the month, supported by the easing tension in the Middle East and the signing of the US-China phase-one trade deal. The S&P 500 and the tech-heavy NASDAQ returned 2.29% and 1.97% respectively for the week ending January 17, 2020.

However, market sentiment shifted rapidly towards the end of the month, following the coronavirus outbreak in China. Investors feared that the epidemic, which draws parallel to the SARS outbreak in 2003 might have an adverse impact on the global economic outlook. The Shenzhen and Shanghai benchmarks were down 8.45% and 7.72% on February 3, after the onshore markets reopened following the Chinese New Year holiday. The two market benchmarks partially recouped their losses over the following days thanks to the liquidity injection introduced by the PBOC, as well as the tariff reduction on US imports.

Over in Europe, the FTSE 100 ended January down 3.40%, underperforming other European equity markets as strong British pound weighed on UK equities. Meanwhile, global government bonds posted gains during the month, driven by the risk-off sentiment in the market which pushed yields lower.

Approximately 56.0% of the underlying constituents of the Eurekahedge Hedge Fund Index posted positive returns in January, and 37.6% of the fund managers in the database were able to generate double-digit returns in 2019. Returns were mixed across regions, with Asia ex-Japan fund managers up 0.93% in January, in spite of the COVID-19 outbreak which contributed to the weak performance of the equity market in the region. Fund managers focusing on North America lost 0.11%, despite encouraging geopolitical developments and strong corporate earnings. Looking at 2019 returns, Asia ex-Japan hedge funds have returned 12.04%, ahead of their North American peers who were up 9.06%.

Highlights:

- The Eurekahedge Hedge Fund Index returned 8.67% in 2019, supported by the risk-on sentiment among investors and positive geopolitical developments throughout the year. Roughly 37.6% of the hedge fund managers comprising the index have recorded double-digit gains over the year.

- The global hedge fund industry AUM had increased by US$10.3 billion in 2019. Investor redemptions totalling US$127.5 billion have been recorded throughout the year, a level the industry has not seen after the global financial crisis.

- The Eurekahedge North American Hedge Fund Index was up 9.06% throughout 2019, as fund managers focusing on the region benefited from the equity market rally throughout the year. The S&P 500 has gained 28.88% over the year, while the tech-heavy NASDAQ Composite was up 35.23% over the same period. North American hedge fund managers had recorded US$94.9 billion of performance growth in 2019.

- The Eurekahedge Greater China Hedge Fund Index ended 2019 up 16.04% on the back of the region's underlying equity market rally. The US$30.3 billion mandate has seen US$2.7 billion of performance growth, offset by US$0.3 billion of investor redemptions over the year.

- The Eurekahedge Long Short Equities Hedge Fund Index was up 11.24% in 2019, as they benefited from the robust equity market rally throughout the year, which resulted in double-digit gains for the MSCI ACWI (Local). The strategic mandate had a slow start in 2020, as equity fund managers slumped 0.35% in January on the back of weak global equity market performance.

- The Eurekahedge Fixed Income Hedge Fund Index returned 7.94% throughout 2019, supported by major central bank policies which pushed yields lower throughout the year. Fixed income fund managers gained 0.82% in January as investors sought safe haven assets following the COVID-19 outbreak.

- The Eurekahedge ILS Advisers Index which represents fund managers primarily exposed to non-life risks ended 2019 up 0.92%, in contrast to how the index was down 3.92% and 5.60% in 2018 and 2017 respectively as ILS fund managers bore the brunt of the catastrophic Atlantic hurricane seasons during those years. In contrast, ILS fund managers with significant life risk exposure ended the year up 7.65%.

- The recently launched Eurekahedge Crypto-Currency Hedge Fund Index was up 22.29% in January, supported by the strong performance of Bitcoin which ended the month up 31.63%. Fund managers focusing on crypto-currencies gained 16.41% throughout 2019.

Press release
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