Eurekahedge: Hedge fund index down 0.54% in March

Eurekahedge
Jiajun Lu
April 17, 2018 11:19 AM

Hedge funds registered their second consecutive month of losses since the start of the year, according to an update of Eurekahedge’s Hedge Fund Index. The Eurekahedge Hedge Fund Index declined 0.54% in March while still outperforming the MSCI World Index which ended the month down 2.215%.

In addition to the March loss, hedge funds were down 0.13% as of Q1 2018 – their worst quarterly showing since Q1 2016. Assets of the industry expanded by $31.1 billion over the past three months largely on account of investor subscriptions which stand at $31.8 billion since the start of 2018.

March was marked by investors' concerns over the U.S. and China trade war which made headlines throughout the month and negatively affected the global equity markets, most of which ended the month in the red. As of Q1 2018, hedge funds are down 0.13%, ahead of underlying markets as the MSCI World Index posted losses of 2.24%. Close to 55% of managers were in positive territory, and roughly 6% posted year-to-date returns in excess of 10% over the first quarter.

 

Performance across regional mandates was a mixed bag in March, with Latin American mandated hedge funds the only regional mandate to end the month in positive territory, up 0.81% as manager's performance was supported by the strength in underlying equity markets in Latin America. The Ibovespa Index was up a modest of 0.01% in March and up 11.73% year-to-date, supported by interest rates cut and falling inflation numbers in Brazil. On the other hand, Japanese hedge funds posted the steepest loss among regional mandates, declining 1.69% during the month. Asia ex-Japan hedge funds were also down this month, losing 1.44%, followed by European and North American hedge funds which were down 0.72% and 0.14% respectively.

Looking at year-to-date performance, Latin American managers outshone their peers from other regions with gains of 5.19%. Meanwhile, distressed debt hedge fund managers posted the best Q1 2018 performance among all strategies based on preliminary numbers, gaining 7.83% over the quarter, followed by relative value managers who generated gains of 1.01%.  

Key highlights from Eurekahedge’s April Report:

  • The US$256.0 billion CTA/managed futures mandated hedge fund industry has seen its asset base contract by US$13.5 billion year-to-date, with managers witnessing the highest performance-based losses of US$12.6 billion among strategic mandates for Q1 2018, while investor redemptions stood at US$0.9 billion over the same period. The Eurekahedge CTA/Managed Futures Hedge Fund Index was down 1.54% year-to-date.
  • The US$1.65 trillion North American hedge fund industry posted the steepest performance-based losses among regional mandates for Q1 2018, totalling US$1.2 billion while net asset inflows to the region stood at US$20.1 billion – almost 17% lower compared to the net asset inflows recorded in Q1 2017.
  • Multi-strategy mandated hedge funds saw the highest net outflows among strategic mandates for Q1 2018 following steep redemptions worth of US$15.3 billion in February – the highest monthly redemption on record. The Eurekahedge Multi-Strategy Hedge Fund Index was down 0.71% in March and down 0.08% year-to-date.
  • China-US trade war concerns jolted markets, with Asia ex-Japan hedge funds down 1.44% in March, and 0.18% for Q1 2018. Equity-long/short managers focused on the region posted their worst quarterly results since Q1 2016 and are down 0.41% for the year. Japanese managers were also down 1.69% in March and down 1.58% year-to-date – the worst performing regional mandated funds in Q1 2018.
  • The Eurekahedge Crypto-Currency Hedge Fund Index was down for three consecutive months, losing roughly 34.7% in March bringing its Q1 2018 losses to 48.37%. In contrast, bitcoin has lost over 50.0% over the same period.
  • Amidst a slowing launch pipeline in Asia, new funds launched in 2018 are charging higher performance and management fees of 17.75% and 1.41% respectively. In contrast, hedge fund start-up fees stood at 15.43% and 1.30% respectively in 2017.

Eurekahedge’s data was based on 41.72% of funds which have reported March 2018 returns as at 12 April 2018. The company tracks asset flows, hedge fund performance and regional key trends across the hedge fund universe, measuring more than 130 data points on more than 24,000 alternative funds in its database.

 

About the Author

Launched in 2001, Eurekahedge has a proven track record spanning over 16 years as the world's largest independent data provider and alternative research firm specialising in global hedge fund databases and research. Headquartered in Singapore with offices in New York and Philippines, the global expertise of our research team constantly adapts to industry changes and needs, allowing Eurekahedge to develop and offer a wide array of products and services coveted by institutional investors, family offices, accredited investors, qualified purchasers, financial institutions and media sources.