The Eurekahedge Report - February 2012

Hedge funds started 2012 on a strong note, as the composite Eurekahedge Hedge Fund Index rose 2.1%¹ on the month. Rallying equity markets, on the back of a sharp increase in risk appetite, coupled with marked reversals across some other asset classes – such as commodities and currencies – were among the factors responsible for the month’s gains. Additionally, better than expected economic data coupled with easy monetary conditions (in the form of bond purchases) further improved investor sentiment during January. Total hedge fund assets under management climbed back above the US$1.72 trillion mark, through US$11.35 billion of performance based growth and US$3.66 billion of net asset inflows   

Highlights of hedge fund performance and asset flows for the month are as follows:

January 2012	US$ billion
Allocation (Inflows)	21.65
Redemption (Outflows)	-17.99
Net Asset Flows	3.66
Positive Performance (Growth)	14.79
Negative Performance (Decline)	-3.44
Total	11.35
Overall Total	15.02

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Hedge funds gain 2.15% in Jan 2012, the strongest monthly return since Dec 2010

Eurekahedge Hedge Fund Index witnessed positive returns in all regions and strategies for January

The Eurekahedge Hedge Fund Index was up 2.15% in January amid a strong resurgence in risk appetite, making it the strongest monthly return for the index since December2010. 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 returns since December 2010, gaining 2.15% in January 2012.
• All regions and strategies delivered positive returns in January.
• Hedge funds investing in insurance linked securities continue to post excellent profits with low volatility – the funds have delivered annualised returns of 7% and a sharpe ratio of 2, over the last 6 years.
• Emerging market macro managers have gained 7.59% in the past 12 months.
• Small hedge funds outperformed large hedge funds in January 2012.
• Funds of hedge funds witnessed their best monthly return since December 2010.
• Early reporting funds indicate that between allthe strategies, equity investing funds attracted the largest inflows in January 2012.

To read more, please see the full Eurekahedge Index Flash, also accessible on Scribd and Issuu.