January was not a happy start to the year for hedge funds, as managers witnessed a drag in performance — down 1.20% during the month. Investor panic induced strong downward pressure on equity markets leading to a sell-off and the resulting capital flight to safe havens. The MSCI World Index declined 5.71% over the same period, with much of the weakness in the global equity markets being led by Asia.
Here are some key highlights from the Eurekahedge report.
- Asian managers posted their weakest returns since August last year, with Greater China mandated funds down 5.76% in January while Japan dedicated funds lost 2.71%. The Asian hedge fund space expanded by US$10.7 billion in 2015 through a combination of investor flows and performance-based gains.
- Event driven hedge funds posted the worst returns among all hedge fund strategic mandates, down 3.56% in January. North American and European event driven managers were down 5.36% and 3.14% respectively while Asian managers posted losses of 4.65% in what is turning out to be the worst month for the strategy since 2011.
- The European hedge funds sector registered the strongest growth in AUM among all regional mandates in 2015, growing their asset base by almost 10% during the year to US$535 billion. Investor allocations to the region stood at US$ 40.5 billion, a year-on-year increase of 110%.
- CTA/managed futures, tail-risk and long volatility were the only strategies to end the month in green with returns coming in at 2.32%, 3.53% and 2.59% respectively.
- The US$80.9 billion Islamic funds industry managed to outperform the Dow Jones Islamic World Index in 2015, despite a very challenging market environment that saw a spike in investor redemptions as oil dependent economies in the Middle East call down capital in the face of worsening budget deficits.