Data from Eurekahedge suggest that the hedge fund industry grew its total assets by $75bn through 2012, as its own benchmark Hedge Fund Index underperformed the MSCI World over the year.
The data provider, which monitors some 26,000 products including hedge funds, funds of funds, Ucits, private equity, Islamic and property funds, said managers faced a difficult trading environment over the period.
Markets were hit by risk-on and risk-off modes driven by political and macro events rather than fundamentals.
The Eurekahedge Hedge Fund Index was up 1% in December, bringing the yearly number to 5.63%. The MSCI World Index1 returned 2.28% in December and was up 13.75% for year 2012.
These overall figures hide some significant performance differences between discrete months.
Eurekahedge said that hedge funds started the year on a strong positive note, gaining 4.16% in the first two months before posting losses for four consecutive months. Performance rebounded in the second half of the year, with hedge funds gaining 3.92%, when markets rallied amid positive announcements by governments around the world.
Its selected highlights for 2012 include:
• 2012 hedge fund returns were the lowest for a positive year
• Total assets grew by US$75bn taking the size of the overall industry to US$1.78trn
• Launch activity slowed down in 2012 with 959 hedge funds launching in the year while fund closure rate was the highest since the financial crisis with 860 funds closing shop during 2012
• Capital raising remained challenging with net asset flows standing at US$19bn for the year
• Hedge funds focused on emerging markets provided the best returns for 2012, with Asia ex-Japan funds up 10.5% over the year while Latin American funds were up 11.2%
• The Mizuho-Eurekahedge Index, an asset-weighted index, finished the year with gains of nearly 6%
• Distressed debt funds delivered the strongest performance among strategies, gaining 12.2% in 2012, while fixed income and relative value hedge funds also finished the year with double digit growth
|Asset flows for 2012||2012 $bn||2011 $bn|
|North American Hedge Funds||24.3||59|
|European Hedge Funds||-2.7||-8.8|
|Japan Hedge Funds||-0.6||0.6|
|Asia ex-Japan Hedge Funds||-0.3||1.3|
|Latin American Hedge Funds||-1.7||-5|
|Global Hedge Funds||19||47.2|