Hedge funds gain US$75 billion in 2012

Date: Wednesday, January 2, 2013
Author: EurekaHedge


Eurekahedge

Managers were faced with a tough trading environment in 2012 as global markets remained unpredictable and volatile throughout most of the year. Market themes were dominated by the risk-on and risk-off modes following political and macro events, rather than fundamentals. The Eurekahedge Hedge Fund Index was up 1% in December, bringing the yearly number to 5.63%. The MSCI World Index1 returned 2.28% in December and was up 13.75% for year 2012.

Hedge funds started the year on a strong positive note, gaining 4.16% in the first two months before posting losses for 4 consecutive months. Performance rebounded in the second half of the year, with hedge funds gaining 3.92%, as global markets rallied amid positive announcements by governments around the world.

Hedge fund highlights for 2012:

  • 2012 hedge fund returns were the lowest for a positive year – the Eurekahedge Hedge Fund Index was up 1% in December and 5.63% for 2012 as a whole

     
  • Total assets grew by US$75 billion taking the size of the overall industry to US$1.78 trillion

     
  • Launch activity slowed down in 2012 with 959 hedge funds launching in the year while fund closure rate was the highest since the financial crisis with 860 funds closing shop during 2012

     
  • Capital raising remained challenging with net asset flows standing at US$19 billion for the year

     
  • Hedge funds focused on emerging markets provided the best returns for 2012, with Asia ex-Japan funds up 10.5% over the year while Latin American funds were up 11.2%

     
  • The Mizuho-Eurekahedge Index, an asset-weighted index, finished the year with gains of nearly 6%

     
  • Distressed debt fund delivered the strongest performance among strategies, gaining 12.2% in 2012, while fixed income and relative value hedge funds also finished the year with double digit growth

2012 hedge fund asset flows

Asset Flows for 2012 2012
(US$ billion)		 2011
(US$ billion)
North American Hedge Funds 24.3 59
European Hedge Funds -2.7 -8.8
Japan Hedge Funds -0.6 0.6
Asia ex-Japan Hedge Funds -0.3 1.3
Latin American Hedge Funds -1.7 -5
Global Hedge Funds 19 47.2

 

Hedge fund indices in 2012