Hedge funds down 3.85 per cent in 2018
The Eurekahedge Hedge Fund Index was down 3.85 per cent in 2018, outperforming the MSCI AC World Index (Local) which declined 10.18 per cent over the year.
Throughout the year, the global hedge fund industry saw performance-based losses and net investor outflows totalling USD58.9 billion and USD51.6 billion respectively, in contrast to how the industry assets grew USD221.9 billion over the preceding year.
The first quarter of 2018 saw the return of market volatility, which pushed nearly every major strategic mandate down into the red in February. CTA/managed futures hedge funds suffered the heftiest losses, with the Eurekahedge CTA/Managed Futures Hedge Fund Index down 4.09 per cent in February alone. Throughout the year, the mandate had lost 14.9 per cent of its total AUM since the end of 2017.
Preliminary data showed that the long/short equities mandate suffered USD18.0 billion of performance-based losses and USD3.5 billion of investor redemptions in December. Investors have redeemed USD18.3 billion from equity hedged strategies over the past year as they ended 2018 as the worst performing strategy - down 6.27 per cent for the year.
European hedge fund managers have been struggling under the uncertainties surrounding Brexit negotiations and Italy’s budget concerns throughout most of 2018. The Eurekahedge European Hedge Fund Index spent eight months of 2018 in the red, and recorded its worst yearly return (-4.42 per cent) since the peak of the Eurozone crisis in 2011.
Hedge fund managers focusing on Asia Pacific have been suffering from the US-China tariff spat and the Fed’s rate hikes, which sent Asian equity markets and currencies plummeting. Greater China and India mandates, the two best performers among regional mandates in 2017, were down 14.24 per cent and 7.37 per cent respectively throughout 2018.
Fund managers utilising AI/machine learning strategies were up 1.52 per cent in November and 1.43 per cent in December, ending their streak of losses which resulted in the first negative annual return recorded by the Eurekahedge AI Hedge Fund Index. The index was down 3.68 per cent over 2018.
The Eurekahedge ILS Advisers Index was down 2.93 per cent throughout 2018, marking it as the second worst year behind 2017, during which the index slumped 5.60 per cent. As the catastrophic losses incurred by Hurricane Florence and Hurricane Michael came to light, the USD100.7 billion ILS hedge fund industry were adversely affected.
The Eurekahedge Crypto-Currency Hedge Fund Index was down 6.04 per cent in December, as Bitcoin price nearly touched the USD3,000 level in the middle of the month. The index has wiped 70.27 per cent of its value throughout 2018. In comparison, the index soared 1,708.50 per cent in 2017, supported by the rally in crypto-currency prices during the year.