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Global hedge funds asset under management went down by US$21.5 billion in May driven by a performance-based decline of US$2.4 billion combined with net outflows of US$19.1 billion. On a year-to-date basis, global hedge funds reported net investor redemptions of US$71.4 billion, marking its highest May year-to-date outflows since 2009, while the industry posted performance-based growth of US$1.8 billion throughout the year.

CTA/managed futures, macro and multi-strategy reported a combined performance-based growth of US$81.2 billion throughout the year, thanks to the ability of these fund managers to allocate their assets into well-performing markets in the period. In terms of net flows, the three mandates posted a total net outflow of US$0.7 billion during the year.

On an asset-weighted basis, hedge funds were down 0.23% in May, as captured by the Eurekahedge Asset Weighted Index - USD, outperforming its equal-weighted counterpart by 0.33%. On a year-to-date basis, the Eurekahedge Asset-Weighted Index - USD was down -1.69% over the first five months of the year.

Eurekahedge CTA/Managed Futures Hedge Fund Index down -0.26% in May

The Eurekahedge CTA/Managed Futures Hedge Fund Index was down -0.26% in May, snapping its five-month winning streak. Commodity prices except for oil retreated during the month owing to the concern over an impending global recession driven by the hawkish Federal Reserve and geopolitical uncertainty. In terms of year-to-date return, CTA/managed futures hedge funds were up 8.06% over the first five months of the year.

Emerging market hedge funds, as represented by the Eurekahedge Emerging Markets Hedge Fund Index were up 0.40% in May, outperforming its developed market peers in North America and Europe who were down by -0.36% and -0.89% respectively. The positive performance of the equity market in the emerging markets particularly in Asia and Latin America supported the fund manager's performance during the month. China's Shanghai Composite was up 4.57% in May, while Brazil's IBOVESPA was up 3.22% over the same period.

Eurekahedge North America Long Short Equities Hedge Fund Index also down 0.27%

The Eurekahedge North America Long Short Equities Hedge Fund Index was down 0.27% in May, reducing its year-to-date return to -7.85%. US equities on average ended the month flat as seen by the S&P 500 and Dow Jones, while US tech companies declined as seen by the -2.05% return of the NASDAQ Composite. Selling pressure on US equity markets continued during the first half of May due to higher inflation rates in the region which have resulted in an increasingly hawkish Federal Reserve. In the second half of May, US equities recovered their losses and ended the month flat, thanks to the easing lockdowns in China and market expectations that inflation rates in the region have reached its peak.

Fund managers utilising tail risk strategies as represented by the CBOE Eurekahedge Tail Risk Hedge Fund Index were down -3.21% in May. Despite the losses incurred in May, tail risk hedge fund managers outperformed their strategic peers in 2022, supported by heightened market volatility throughout the year. Institutional investors are allocating two to four percent of their assets under management to tail risk strategies, with the potential for further growth in the future as more fund managers seek to hedge their portfolios against black swan events given the increasingly challenging and volatile market environment. On a year-to-date basis, tail risk hedge funds were up 6.82% as of May 2022.

Fund managers focusing on cryptocurrencies as represented by the Eurekahedge Crypto-Currency Hedge Fund Index declined -19.31% in May, reducing their year-to-date return to -37.69%. Similar to other risk asset classes, the magnitude of market breakdown has also impacted the cryptocurrency market. Bitcoin was down -17.83% in May, while Ethereum the second-largest cryptocurrency in terms of market value was much more volatile as it recorded -29.07% of losses during the month. By comparison, cryptocurrency hedge funds posted a May year-to-date return of -35.52% in 2018, the worst year for cryptocurrency hedge funds since the inception of the index in terms of full year returns.

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