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Hedge funds recover from first quarter losses

Hedge funds recover from first quarter losses

Hedge funds have recovered from their negative performance in the first quarter, led by European and North American hedge funds.

In April, European managers were up 0.78% and North American hedge funds saw gains of 0.27%, according to data provider Eurekahedge, which currently tracks 23,688 hedge funds globally.

Asian hedge funds, on the other hand, posted their third consecutive month of losses in April, down 0.12%.

Total assets for Asia ex-Japan hedge funds now stand at $178.4 billion, following performance gains of $0.2 billion in April. However, investors withdrew $0.7 billion over the same period, leading to a fall in total assets under management.

On a year-to-date basis, Asian managers lost 0.03%, with weaknesses led by Japan and India mandated hedge funds which were down 1.69% and 1.19% respectively.

However, Preqin, another data provider that covers 16,000 hedge funds, estimated that funds focused on the overall Asia-Pacific region produced returns of 0.26%.

The hedge fund industry bounced back to positive territory in April, up 0.55%, with total assets amounting to $2.4 trillion. Performance growth accounted for $1.5 billion but investors withdrew $3.4 billion in assets globally last month.

Total hedge fund assets have grown by $31.9 billion over the past four months, with $36.2 billion attributed to investor inflows while managers posted performance-based losses of $4.4 billion.

The industry was hit hard by the sell-off in global equity markets in early February, declining 1.62% that month and 0.13% in the first quarter. In fact, at 2.3%, Asia ex-Japan mandated hedge funds posted the steepest losses among regional mandates following the flash crash in February.

Strategies

February was also the worst month for commodity trading advisors (CTAs) since 2001, with the 20 largest managers down by 6.4% according to Societe Generale estimates.

Eurekahedge data found that CTAs and managed futures funds are still experiencing net asset outflows, despite bringing in $0.8 billion through performance growth in April.

The funds posted their third consecutive month of investor redemptions totalling $5.9 billion, bringing year-to-date outflows to $2.8 billion.

Furthermore, managers posted performance-based year-to-date losses of $11.7 billion as of April 2018, the highest among all strategic mandates.

In April alone, however, all strategic mandates posted positive performance, with distressed debt leading the tables at 1.12%.

Distressed debt has been the only strategy to post four consecutive months of gains since the start of the year, Eurekahedge noted in its latest report.

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