The Eurekahedge Hedge Fund Index was up 2.32 per cent in January, as the risk-on sentiment returned to the market, propelling the MSCI AC World Index (Local) up 7.36 per cent during the month.
That’s according to the February 2019 Eurekahedge Report which reveals that throughout 2018, hedge fund managers posted losses of 4.08 per cent, outperforming the global equity market which slumped 10.18 per cent over the year.
The global hedge fund industry saw its assets decline USD154.4 billion throughout 2018, down 6.3 per cent from its end-2017 figure – the largest yearly percentage drop since 2008, as fund managers struggled under the global trade tension and aggressive Fed rate hikes which caused elevated market volatility level through the better part of the year. Investors redeemed USD93.4 billion during the year, and USD61.0 billion of performance losses were recorded.
The long/short equities mandate suffered USD23.1 billion of performance losses and USD40.0 billion of net investor outflows in 2018, resulting in a 7.3 per cent decline in total assets over the year. Fund managers utilising equity strategies kicked off 2019 with performance gains totalling USD23.1 billion in January. Despite that, investor redemptions of USD1.8 billion were recorded.
North American hedge fund managers recorded USD38.8 billion of performance-based losses, as well as USD46.0 billion of investor outflows in 2018, resulting in the biggest yearly decline in assets under management since the 2008 global financial crisis, during which the region’s asset base saw a USD214.4 billion decline.
Fund managers utilising AI/machine learning strategies returned 2.48 per cent in January, after posting losses in eight out of the 12 months last year. Quant strategies continued their struggle with the CTA/managed futures mandate seeing USD29.0 billion of net outflows in 2018.
Returns across the CBOE Eurekahedge Volatility Indexes were mixed in January, with long volatility mandate down 5.28 per cent and short volatility mandate up 4.02 per cent as market volatilities dwindled throughout the month. The CBOE VIX Index plummeted 34.35 per cent in January as the risk-off sentiment among investors eased off.
The Eurekahedge ILS Advisers Index was up 0.50 per cent in January, ending its streak of losses through the final quarter of 2018 which resulted from catastrophic losses incurred by the 2018 Atlantic hurricane season. ILS fund managers posted losses of 5.60 per cent and 3.57 per cent in 2017 and 2018 respectively.
The Eurekahedge Crypto-Currency Hedge Fund Index declined 9.07 per cent in January, narrowly outperforming Bitcoin which slumped 10.98 per cent over the month. Crypto-currency hedge fund managers lost 71.86 per cent throughout 2018, posting their worst year on record.
Funds of hedge funds ended 2018 down 4.58 per cent, trailing behind the average hedge fund which would have lost 4.08 per cent throughout the year. The fund of hedge funds industry saw investor redemptions totalling USD14.6 billion last year.
