Chicago-based Hedge Fund Research, Inc. (HFR) reports that a performance-based rally drove industry assets to a record level of nearly $665 billion in Q2 2003.
The $47 billion Q2 increase in industry size was comprised of only an estimated $1.4 billion in new assets, underscoring the role of strong, broad-based performance as the key factor in last quarter's asset appreciation.
These were among the findings in HFR's Quarterly Industry Report for the Second Quarter 2003.
Hedge Fund strategies generally performed well during the Quarter, on the heels of stronger economic data and a rally in the equity markets. Most notable were the 18.2% increase in HFRI Equity Non-Hedge Index, the 13.0% rise in the HFRI Emerging Market Composite and the 13.9% gain in the HFRI Sector Index - all predominantly long-biased strategies.
Conversely, the market's upturn left short-selling strategies with a 12.3% drop during the quarter. Other strong performers for the period were the HFRI Equity Hedge Index, which was up 8.0%, the HFRI Market Timing, which rose 7.9%, and the HFRI Event-Driven Index, which jumped 9.4% during the quarter.
Among the other findings in the HFR report:
- Fund of Funds gained more than $87 billion in net assets on the quarter - the largest quarterly influx of net assets this year (HFR tracks Fund of Funds assets separately).
- Other quarterly asset gainers were Macro and Relative Value Arbitrage, with estimated net gains of $5.8 billion and $2.3 billion, respectively.
- The $5 billion outflow of assets from Equity Hedge strategies occurred despite rather strong performance gains, underscoring capital outflows from early-quarter fears of a continuing conflict in the Middle East.
- The total number of funds rose significantly on the quarter with the estimated total number of funds, including Fund of Funds, now standing at 5,660. HFR estimates that 281 new funds have been launched since the beginning of 2003.
Background Note: Chicago-based HFR Group LLC, founded in 1993, is one of the global leaders in hedge fund data, research, indexation and asset management. The HFR Group companies include Hedge Fund Research, Inc., and HFR Asset Management L.L.C. Hedge Fund Research produces HFR Database, considered to be the definitive source of hedge fund performance and information.
HFR also distributes the HFRI Monthly Performance Indices-the premier benchmarks for the hedge fund industry.
The HFR 2Q 2003 Industry Report contains more than 100 pages of charts and graphs provided in both PowerPoint and Adobe Acrobat formats. For more information on the Report or on HFRI Indices, please visit http://www.hedgefundresearch.com .
Copyright hedgeweek 2003