Hedge Fund Assets and Performance Continued to Climb in April

Date: Tuesday, May 11, 2010
Author: Albourne Village

Hedge fund performance was positive again in April 2010 and net investor flows indicated allocations continued to outpace redemptions.

Below are early estimates for April 2010 hedge fund asset flows and performance. A full report will be available later in the month.

Highlights:

· The HFN Hedge Fund Aggregate Index was +1.55% in April 2010 and +4.35% YTD compared to +1.58% in April and +7.05% YTD for the S&P 500 TR Index.

· Through April, the HFN Hedge Fund Aggregate Index stood 3.91% above the pre-2008 financial crisis peak set back in October 2007.

· Hedge fund assets increased an estimated +1.60% to $2.299 trillion in April.

· Investors allocated a net $7.67 billion to hedge funds in April and performance accounted for an additional $28.52 billion resulting in a total assets increase of $36.18 billion during the month.

· Investor flows were positive in April for the 11th month in the last 12. There was a slight outflow in December 2009 due to year-end redemption trends.

· The Core Growth Rate (% increase in assets due solely to investor flows) was +0.34% in April.

· Total hedge fund assets are an estimated $638 billion below their peak set in Q2 2008.

 

Positive returns in April appeared to be driven primarily by long equity exposures, but performance was broadly positive across all sectors of focus. Funds focusing on small/micro cap issues had the best aggregate performance and those maintaining a short bias again lagged the rest of the industry. Regional exposures mostly enabled positive returns with India funds producing the best performance while funds investing in the Africa/Middle East produced the lone regional negative average returns. Funds investing in Japan continued to outperform.

 

Details from April:

Regional/Country Specific Exposure:

Emerging market fund returns were above the industry’s average in April for the 12th month in the last 14. Funds investing in India and Russia led EM returns. Funds investing in Brazil and across broad Latin American markets have underperformed on average in 2010. There have been some funds producing outstanding returns investing in LatAm markets, but as a whole the group has lagged other regional performance.

 

Emerging Market Benchmarks:

HFN Brazil Index: +0.20% in April, -0.06% in 2010

HFN China Index: +1.27% in April, -0.05% in 2010

HFN India Index: +4.40% in April, +7.36% in 2010

HFN Russia Index: +2.06% in April, +12.36% in 2010

HFN Latin America Index: +0.27% in April, +0.55% in 2010

HFN MENA Index: -0.33% in April, +8.90% in 2010

HFN Emerging Markets Index: +1.67% in April, 7.00% in 2010

 

Broad and Developed Market Benchmarks:

HFN Asia Index: +2.48% in April, +5.10% in 2010

HFN Europe Index: +0.84% in April, +4.03% in 2010

HFN North America Index: +2.23% in April, +5.74% in 2010

HFN Australia Index: +0.26% in April, +0.20% in 2010

HFN Japan Index: +3.14% in April, +9.57% in 2010

HFN U.S. Index: +2.22% in April, +5.55% in 2010

 

Fixed Income (FI) Strategies

The average performance from fixed income focused strategies was +1.24% in April. Corporate bond strategies again outperformed both mortgage and government bond related strategies, though all were higher on average for the month.

 

Corporate bond strategies: +2.13% in April, +4.80% in 2010

Government bond strategies: -0.77% in April, +2.33% in 2010

HFN Distressed Index: +1.37% in April, +7.72% in 2010

HFN Mortgages Index: +1.61% in April, +6.63% in 2010

HFN Fixed Income Arbitrage Index: +0.78% in April, +5.20% in 2010

 

Equity (EQ) Strategies

The average performance from equity focused strategies was +1.76% in April. Technology sector funds performed best followed by finance and healthcare sector focused funds while energy sector funds lagged the industry’s average.

 

HFN Long/Short Equity Index: +1.69% in April, +4.74% in 2010

HFN Market Neutral EQ Index: +0.58% in April, +1.95% in 2010

HFN Short Bias Index: -1.64% in April, -7.12% in 2010

HFN Energy Sector Index: +1.44% in April, +5.20% in 2010

HFN Healthcare Sector Index: +1.55% in April, +5.59% in 2010

HFN Technology Sector Index: +3.96% in April, +6.85% in 2010

 

Commodity and Foreign Exchange (FX) Related Strategies

CTA/managed futures strategies continued to lag the rest of the hedge fund industry, on average, in April, but posted positive returns for the third straight month.

 

Agriculture sector focused funds: +1.85% in April, -0.82% in 2010

Foreign Exchange focused funds: +1.21% in April, +2.56% in 2010

Oil/energy related commodities: +2.08% in April, +2.75% in 2010

Financial Futures focused funds: +1.27% in April, -1.23% in 2010

Broad/Multi Sector CTA products: +0.33% in April, -0.54% in 2010

HFN CTA/Managed Futures Index: +1.18% in April, +0.65% in 2010