Eurekahedge’s August report says that the Eurekahedge Hedge Fund Index grew by 0.88% in July 2017, while the underlying markets represented by the MSCI World Index grew by 1.64%.
For June, overall, managers reported performance based losses of $8.4 billion, so that the industry growth was due entirely to net asset inflow, which was $14 billion. July, though, was more successful. Preliminary data indicates performance gained a positive net of $4.7 billion. Net asset flows were also positive.
Year-to-date gains for the global industry are 4.27%. Almost three quarters of fund managers (73%) are in positive territory YTD. Almost 15% have posted gains of 10% or more.
In dollar terms, total hedge fund assets grew by $108.6 billion over the first seven months of the year, and $71.6 billion of that may be attributed to investor inflows, the remainder to performance based gains. The industry’s total assets now stand at $2.33 trillion.
Assets under management for the North American hedge fund industry are at a record high of $1.56 trillion, which represents roughly two thirds of the global total. Performance based gains for the North American funds in the first seven months of the year came to $19.1 trillion. This, by the way, refers to investing geography, the contractual mandates, not the location of the head office of a fund’s management.
In July specifically, the North American industry had performance based growth of $2.9 billion. This, and the net inflow from investors of $2.3 billion, made for a 0.33% change in assets. That was the smallest change in assets by region. The leader of the league table, in percentage change of assets for the month, is Latin America, which had a net growth by performance of $0.3 billion, a net inflow of roughly the same. That amounted to a 0.97% increase in assets.
When it turns to the issue of the context of such numbers, the report tells us that the underlying economy in the United States “continues to march along at a steady pace,” with a weakening dollar and a gain in oil prices. Both of those facts spur higher inflation expectations, and that helps the hawks, that is, it makes the case for an interest rate hike by the Federal Reserve later this year. But there are other considerations that may help the inflation doves on the Fed, specifically: upcoming difficult deliberations over the fiscal debt ceiling.
Eurekahedge sees a lot of “growth momentum” in Europe. Foreign investors in the region are benefiting from the strengthening of the euro.
Hedge funds are also finding pluckable fruits in the emerging markets, especially in India, China, and Brazil, where “valuations remain relatively cheap.” Asian funds have YTD growth of $10.3 billion, and $6.6 billion of that is accounted for by performance.
Source: Bloomberg Pro Terminal
Jr Trader Petar Milanov
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