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Hedge Funds Gain 2.15% in January 2012, Eurekahedge

Date: Friday, February 24, 2012
Author: HedgeCo.Net

The Eurekahedge Hedge Fund Index was up 2.10% in January on the back of a strong resurgence in risk appetite, making it the strongest monthly return for the index since December 2010. The MSCI World Index gained 4.96% as markets overcame lingering concerns about the European debt situation and posted strong rallies. The capital-weighted Mizuho-Eurekahedge Index was up 1.80% during the month.

Key highlights for January 2012:

  • Hedge funds posted their best monthly return since December 2010, gaining 2.15% in January 2012 – making it the best start to a year since 2006.
  • All regions and strategies delivered positive returns in January.
  • The Mizuho-Eurekahedge Emerging Markets Index was up 5.79% in January.
  • Emerging market macro managers gained 7.59% in the past 12 months.
  • European hedge funds witnessed the ninth consecutive month of net negative asset flows, losing US$42 billion through net redemptions over this period.
  • Assets in CTA/managed futures funds and macro hedge funds reach historical highs of US$213 billion and US$135 billion respectively.
  • Small hedge funds outperformed large hedge funds in January 2012 – first time since October 2011.
  • Funds of hedge funds witnessed their best monthly return since December 2010.
  • European funds witnessed the best monthly return since September 2009, up 2.84%.
  • 65% of Asian hedge funds remained below their historical high water marks as at the end of January 2012.
  • Macro funds attracted US$7.8 billion of inflows in January, their highest monthly net flow on record.
  • Emerging markets funds of hedge funds recorded the highest return since May 2009 – up 4.22%.

All regional mandates finished the month with positive returns as risk appetite was given a boost early in the month with strong economic data from the US. Better than expected debt auctions in Western Europe added further steam to the rally while the US Federal Reserve’s announcement of keeping interest rates low into 2014 added further optimism in the marketplace.

Hedge funds investing in Asia ex-Japan delivered the best gains across the different strategic mandates with managers gaining 4.24% in January.

Asset flows update
Hedge funds posted a remarkable rebound in January as global markets rallied on renewed risk appetite. The Eurekahedge Hedge Fund Index was up 2.10% during the month, making it the best start of the year since 2006. The MSCI World Index gained 4.96% driven by positive data from the US and Europe. The asset-weighted Mizuho-Eurekahedge Index was up 1.58% in January, while the Mizuho-Eurekahedge Emerging Markets Index gained an excellent 5.89% during the month.

The total size of the industry increased by US$15 billion as managers attracted healthy asset flows in addition to posting excellent performance. The net redemptions in 4Q 2011 had partially been attributed to portfolio rebalancing and as expected some of that capital has started to flow back into the industry – net positive asset flow accounted for US$3.7 billion in January. Performance-based growth was also strong during the month with managers posting gains of US$11.4 billion taking the size of the industry to US$1.72 trillion. Going forward we expect the global hedge funds sector to attract an increasing amount of allocations in the first half of the year.