Hedge funds were down 2.15 per cent for the year, their weakest performance on record since 2008 when they declined 9.55 per cent in the 10 months through to October, according to figures released by Eurekahedge.
Almost 47 per cent of the managers are in the green for the year with roughly 8 per cent of the managers posting double digit gains as tracked in the Eurekahedge Global Hedge Funds Database.
Total assets under management have decreased by USD32.2 billion as of October 2018 year-to-date, compared with an increase of USD173.2 billion over the same period last year as performance-driven losses and investor redemptions have capped asset growth. Barring January earlier this year, investors have redeemed USD53.5 billion from hedge funds globally through to October.
Emerging markets focused mandates are in the red for the year down 4.57 per cent year-to-date, with Asian managers down 8.02 per cent for the year with the underlying Eurekahedge Greater China Hedge Fund Index posting losses of 13.94 per cent as of October 2018.
Across strategies, distressed debt, relative value and fixed income hedge funds lead for the year up 5.58 per cent, 1.58 per cent and 0.81 per cent respectively.
Long/short equities mandate bore the brunt of the equity market selloff in October, with the Eurekahedge Long Short Equities Hedge Fund Index ending the month down 3.32 per cent, dragging its year-to-date return into the red (-3.07 per cent) for the first time in the year. Nearly 80 per cent of funds constituting the mandate posted losses in October, owing to the weak equity market performance over the month which resulted in performance-based losses of USD13.8 billion globally.
Assets under management for CTAs/managed futures strategies have shrunk by almost 11 per cent in 2018 – corresponding to a decline in AUM of USD30.7 billion in the first ten months of the year. Meanwhile multi-strategy hedge funds have recorded the steepest redemptions for the year totalling USD23.1 billion.
The CBOE Eurekahedge Long Volatility Hedge Fund Index ended the month gaining 3.76 per cent in as the risk-off sentiment returned to the markets. The CBOE VIX index spiked to roughly double of its end September value throughout the month. On the other hand, fund managers utilising short volatility strategies posted the steepest losses of 4.86 per cent in October.
The Eurekahedge ILS Advisers Index declined 1.37 per cent throughout the month of October, dragging its year-to-date return to 0.15 per cent. As the catastrophic losses incurred by Hurricane Florence and Hurricane Michael come to light, ILS funds with exposure towards the region were adversely affected.
The Eurekahedge Crypto-Currency Hedge Fund Index has declined 56.96 per cent throughout the year, owing to the crypto-currency market selloff which saw Bitcoin price slipping to barely above the USD4,000 mark. The index is on track to post its worst yearly performance on record.