Hedge funds recorded best outperformance over equities since 2011 in 2018
The Mizuho-Eurekahedge Index (USD), an asset-weighted index representing the global hedge fund industry performance was down 0.39 per cent in December, bringing its year-to-date loss to 4.09 per cent amidst the global equity market sell-off.
Despite ending the year in the red, hedge fund managers recorded their best outperformance over the global equity markets since 2011, as they returned 7.70 per cent more than the MSCI ACWI IMI (USD) throughout 2018.
Historically, the Mizuho-Eurekahedge Index (USD) has outperformed underlying equity markets during periods of market distress, such as the years 2008 and 2011, during which the index outperformed global equity markets by 28.52 per cent and 7.80 per cent respectively.
A total of 601 fund launches and 613 liquidations were recorded in 2018, marking a third consecutive year in which fund closure activities outpace launches. Among these newly launched funds, 55.7 per cent charged no less than 20 per cent performance fees, compared to 45.8 per cent back in 2017. However, both figures are still significantly lower than what was observed prior to the financial crisis, during which an overwhelming majority of hedge funds charged 20 per cent performance fees or higher.