Hedge Funds Reach Record High Of $1.2 Trillion

Date: Wednesday, August 22, 2012
Author: Alex Akesson, HedgeCo.Net

Hedge funds in North America are at an all-time peak and assets under management are at the historically high level of $1.2 trillion, according to the August edition of The Eurekahedge Report.

Asia-based North America investing managers posted returns of 30.87% and 50.65% over five and three year periods, outperforming managers based in all other regions. Managers that charge higher fees and have a lower redemption frequency have also provided significant outperformance to their peers.

Other highlights include:

• The Eurekahedge Hedge Fund Index was up 1.10% in July and 2.57% YTD but the industry saw net outflows of US$4.2 billion.
• Systematic trading managers gained 3% in July.
• The Mizuho-Eurekahedge Top100 Index gained 1.76% in July.
• The Mizuho-Eurekahedge CTA/Managed Futures Index rose 3.08% in July.
• European hedge funds witnessed net outflows in 12 out of the last 15 months.
• Most asset flows in North America have been allocated to the larger funds; the largest fund in North America now accounts for 10% of the assets in the sector.
• Hedge fund attrition rate spiked up in 2Q 2012, with the number of closures exceeding the number of new launches.
• Latest research showed that investors have increased allocations to global macro investing funds and macro managers have raised over US$26 billion July YTD.

Hedge funds rebounded strongly in July after four months of negative returns – the Eurekahedge Hedge Fund Index rose 1.10% bringing its year-to-date (YTD) gain to 2.57%.

Hedge funds ended their longest losing streak since 2008 with positive returns of 1.10% in July as managers captured gains from trends across various asset classes. July saw the first month of positive returns since February and the Eurekahedge Hedge Fund Index remained in positive territory for the year – up 2.57% July year-to-date (YTD). In comparison the MSCI World Index was up 1.05% in July and 5.47% for the year.

Assets under management (AUM) increased by $10.6 billion during the month, bringing the size of the industry to $1.74 trillion. Hedge funds posted performance-based gains of $14.8 billion with managers across all strategies posting profits for the month. The increase in assets through performance was partially offset by net negative asset flows of $4.2 billion – making it the third consecutive month of net outflows from the industry.