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Hedge Funds Up Over $11 Billion in April

Date: Wednesday, May 16, 2012
Author: HedgeCo.Net

Total inflows amounted to $28.13 billion while client redemptions added to $17.72 billion. The MSCI World Index dropped 1.62% on the back of rising eurozone sovereign yields, weak US economic data and slow Chinese growth.

Key highlights from this month’s report:

  • The asset-weighted Mizuho-Eurekahedge Top 100 Index increased 0.28% in April 2012, signaling a better month for larger funds.
  • Hedge funds attracted $10.4 billion during the month of April.
  • Assets in North American hedge funds have increased by nearly $40 billion since the start of the year.
  • Relative value and fixed income hedge funds are a bright light in the industry – they have now witnessed five consecutive months of positive returns with gains of 5.91% and 4.56% respectively.
  • Launch activity remained strong in 2012 with more than 150 funds launched worldwide as at the end of April 2012.
  • Assets in distressed debt hedge funds were back above $60 billion.
  • The Eurekahedge Latin American Hedge Fund Index saw a surge of 6.45% at end-April 2012.

Managers added $1.34 billion through performance with Latin American focused and relative value mandates delivering the highest returns. Total assets under management rose back above the $1.76 trillion mark primarily due to asset gains seen in long/short equity and North American funds.

Performance update
The Eurekahedge Hedge Fund Index was down 0.17% in April; a month that saw risk-aversion return to global markets. Most regional mandates provided downside protection to their investors and outperformed the underlying market indices with the average hedge fund manager finishing the month ahead by 1.45%. The MSCI World Index declined 1.62% during the month.

Negative returns in April affected most regional hedge funds as market sentiment became more risk-averse leading to declines across global markets. After a short few months of strong growth, attention returned to European debt issues, soft US economic data and slowing Chinese growth. Although most regional hedge fund indices ended the month in the red, they delivered notable outperformance to their respective underlying market indices.

The Eurekahedge North American Hedge Fund Index finished the month with positive returns of 0.08%, beating the S&P 500 by 0.83%. Managers with positive returns banked on upbeat corporate earnings and the end of April saw a surge caused by speculation of further stimulus from the US Federal Reserve. European hedge funds provided significant outperformance during the month declining only 0.17% while the MSCI Europe Index lost 2.91%.

Asset flows update
Hedge fund returns were flat to slightly negative in April as most regions and strategies witnessed marginal movements during the month. As managers provided downturn protection amid declining markets globally, the Eurekahedge Hedge Fund Index was down 0.17%1and the MSCI World Index declined 1.62%2.

Total assets under management (AUM) increased by over $11 billion in April, taking the size of the global hedge fund industry back above $1.76 trillion. The sector attracted $10 billion from investors during the month and most of this increase came from positive net asset flows as investors reallocated recently withdrawn capital. Managers also chalked up performance-based gains of $1.3 billion during the month with most of the gains posted by some of the larger, globally investing hedge funds.