The Eurekahedge Report - April 2012

The Eurekahedge Hedge Fund Index was flat to marginally negative through March, losing 0.18% for the month, with the year-to-date figure standing at 4.08%. Japanese hedge funds posted the best monthly returns among regional mandates while Latin American, Asia ex-Japan and European managers outperformed their underlying equity markets. Managers increased their total assets for the quarter by US$47.9 billion through performance and investment flows, with the former accounting for US$40 billion of capital flows. Inflows from investors in the first three months of 2012 amounted to US$7.9 billion, bringing the current assets under management to US$1.75 trillion

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

March 2012	US$ billion
Allocation (Inflows)	9.30
Redemption (Outflows)	-21.92
Net Asset Flows	-12.62
Positive Performance (Growth)	-1.15
Negative Performance (Decline)	0.75
Total	-0.40
Overall Total	-13.02

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Equity investing hedge funds witness their best quarter since Q3 2009

Long/short equity, multi-strategy and relative value funds enjoy their best quarter since Q3 2009

After experiencing the best start to a year since 2000, hedge funds paused for a breather in March 2012, delivering a marginally negative performance. With the exception of the US, most markets across the globe registered declines and the Eurekahedge Hedge Fund Index dipped 0.14% in March with the MSCI World Index up by 0.39% for the month.

Key highlights for March 2012:

• Long/short equity, multi-strategy and relative value funds witnessed their best quarter since 3Q 2009 with gains of 6.1%, 4.93% and 4.29% respectively.
• Assets in hedge funds crossed US$1.76 trillion, gaining over US$50 billion during the first three months of 2012.
• Long-only absolute return funds saw gains of 11.4% in the first quarter of this year.
• Hedge fund managers employing non-conventional strategies have grown their assets to an all time high of US$63.2 billion.
• Relative value managers reached US$50 billion of capital for the first time on record.
• Islamic funds outperformed other alternative vehicles, gaining 0.63% during March 2012.
•  More than 100 hedge funds have been launched globally as at the end of March this year.

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Eurekahedge Funds of Hedge Funds Survey Results - May 2011

The Eurekahedge Funds of Hedge Funds Survey is a new feature of The Eurekahedge Report, highlighting where funds of hedge funds intend to invest in the coming six months. The results are complied through the use of a survey distributed to a representative global sample of 100 funds of hedge funds. Eurekahedge asked funds of hedge funds to indicate how they are planning to allocate capital to hedge funds across different regional and strategic mandates.

The results of the survey shown in The Eurekahedge Report are limited to regional hedge fund investment mandates only – this document goes into the results in greater detail. These detailed results will only ever be disseminated to survey participants and Eurekahedge subscribers who request them.

Regional mandates

As shown in Table 1, for the next 3 months funds of hedge funds have positive view overall on the hedge fund industry with 20% looking to increase their allocations to at least one of the underlying regions. 73% of funds of hedge funds intend to maintain their current allocations while 7% will be looking to decrease their allocations to at least one region.

Amongst all regional mandates, Asia ex-Japan hedge funds are attracting the most interest with 36% of our survey participants looking to increase their allocations over the next 3 months. North American hedge funds are also attracting increasing interest from fund of funds managers while views on Europe and Japan are more balanced.

Table 1: Survey results for funds of hedge funds regional allocations

	Asia ex-Japan	Japan	Europe	Latin America	North America	Total
Increasing allocation	36%	16%	12%	15%	19%	20%
Decreasing allocation	4%	14%	10%	1%	5%	7%
Net	32%	1%	2%	13%	14%	13%
Maintaining current allocations	60%	70%	78%	84%	76%	73%
Total responses	75	76	83	68	83	385
Source: Eurekahedge

Figure 1: Percentage of funds of hedge funds increasing/decreasing regional allocations

Source: Eurekahedge

Strategic mandates

Table 2 shows the survey results by strategic mandates. For the next 3 months, funds of hedge funds have an overall positive view on the different strategies, with 25% looking to increase their allocations to at least one of the underlying regions. 63% of funds of funds intend to maintain their current allocations while 13% will be looking to decrease their allocations to at least one strategy. Event driven and CTA/managed futures appear to be the most popular strategies going forward and will be attracting more capital from 44% and 32% of funds of funds that have a mandate to allocate to these strategies. The outlook on long/short equity funds shows the greatest mix; with 37% of survey participants looking to increase allocations and 20% looking to decrease allocations. Distressed debt funds might be facing redemptions, as 23% of funds of funds indicate that they will be decreasing allocations.

Table 2: Survey results for funds of hedge funds strategic allocations

	Arbitrage	CTA/ managed futures	Distressed debt	Event driven	Fixed income	Long/ short equities	Macro	Multi- strategy	Relative value	Total
Increasing allocation	22%	32%	4%	44%	26%	37%	21%	8%	23%	25%
Decreasing allocation	6%	8%	23%	5%	14%	20%	15%	12%	14%	13%
Net	16%	24%	-19%	40%	13%	17%	6%	-4%	9%	12%
Maintaining current allocations	72%	60%	73%	51%	60%	43%	64%	80%	63%	63%
Total responses	79	87	79	81	80	86	80	83	79	734
Source: Eurekahedge

Figure 2: Percentage of funds of hedge funds increasing/decreasing strategic allocations

 

Source: Eurekahedge