Hedge funds declined 1.62 per cent in February and were up 0.37 per cent year-to-date with total AUM growth still in the green despite losses in February which eroded the solid gains in January, according to the March 2018 Eurekahedge Report.
Investor redemptions stood at USD5.0 billion in February while performance-based losses of USD34.2 billion were recorded. Almost 35 per cent of the fund managers are in the red for the year in what is turning out to be the toughest start to the year for fund managers since 2016.
While hedge fund capital allocations were in the red for the month of February, investor subscriptions have favoured CTA/managed futures and event driven strategies which have seen inflows of USD0.8 billion each followed by long/short equities and arbitrage strategies with inflows of USD0.4 billion each.
Hedge funds managing in excess of USD1 billion reported their highest monthly performance-based decline on record, totalling USD25.5 billion while net outflows of USD4.6 billion were recorded. In contrast, sub-billion dollar hedge funds have fared relatively better with outflows of USD0.3 billion and performance-based losses of USD8.6 billion. The Eurekahedge Billion Dollar Hedge Fund Index was down 1.77 per cent in February, its steepest monthly loss on record since the infamous May 2010 flash crash when the index lost 2.01 per cent.
The USD264.3 billion CTA/managed futures mandated hedge funds reported their biggest monthly performance-based losses since June 2004, totalling USD19.4 billion in February bringing their 2018 year-to-date performance-based figures down to the red, with losses totalling USD9.2 billion. Meanwhile, investors allocated USD0.8 billion into the mandate during the month and USD3.9 billion year-to-date.
The USD1.66 trillion North American hedge fund industry posted the steepest performance-based losses of USD25.9 billion among regional mandates during the month while investor redemptions of USD1.1 billion were recorded. Asset base for the North American hedge fund industry grew by USD23.5 billion over the year with most of this growth attributed to net investor inflows of USD18.2 billion year-to-date, while performance-based gains totalling USD5.3 billion were recorded over the same period.
Asia ex-Japan mandated hedge funds posted the steepest decline among regional mandates during the month, down 2.30 per cent with underlying Greater China and Indian hedge fund managers losing 3.49 per cent and 1.76 per cent respectively. Performance-based losses of USD1.8 billion were recorded while investors redeemed USD0.8 billion from the mandate during the month.
The average performance fee charged by North American hedge funds jumped to 18.49 per cent in 2017 from 17.60 per cent in 2016, before dropping to a historic low of 14.17 per cent as of January 2018. Currently, the average management fee charged by North American hedge funds stands at 1.38 per cent. For more details, please refer to the 2017 Overview: Key Trends in North American Hedge Funds report.
The Eurekahedge Crypto-Currency Hedge Fund Index declined 16.83 per cent in February, bringing its year-to-date losses to 22.47 per cent, barely ahead of the price of bitcoin which declined 26 per cent in the first two months of 2018.