New York (HedgeCo.net) – Hedge funds assets under management grew by US$34.1 billion through December as managers ended 2010 on a high note. The Eurekahedge Hedge Fund Index posted a strong return of 3.01%[1] in the month, bringing the yearly return to 10.93%. This marks an outperformance to underlying markets in the yearly return measure as the MSCI World Index[2] delivered a 7.83% return for the year.

The total assets in the hedge fund industry reached US$1.67 trillion as the funds posted significant profits and attracted significant capital in December. Performance-based gains accounted for US$26 billion as managers delivered substantial gains on the back of resurgent markets. The sector witnessed net positive asset flows to the tune of US$8.11 billion. Although December is usually a relatively slow month for inflows, the heightened market sentiment led to greater than normal inflows last month.

Figure 1 shows the monthly asset flows across the hedge fund industry since December 2008.

Highlights for the month of December include:

· Hedge funds posted double-digit growth in 2010, up 10.93%, and outperformed underlying markets by 3.10%.

· The global hedge fund industry grew by US$34 billion in December – total asset growth for the year stood at US$186.6 billion.

· Total assets in the industry reach US$1.67 trillion and are on track to cross the historical high of US$1.95 trillion by end of 2011.

· North America was the best performing hedge fund region in 2010 up 13.33% for the year and assets in North American hedge funds crossed US$1.1 trillion (67% of the total industry) for the first time since September 2008.

· Japanese hedge funds posted their best annual returns in 5 years, up 8.43% in 2010, and crossed US$15 billion for the first time since 2008.

· The Latin American hedge fund industry reaches a historical high of almost US$60 billion (Asia first reached US$60 billion in 2004 and went on to peak at US$ 176 billion 3 years later).

· All regional and strategic hedge fund indices in the Eurekahedge index suite delivered positive returns for the second year running.

· Distressed debt was the best performing strategy in 2010 and finished the year with gains of 20.78%.

· More than 50% of total asset flows in 2010 (US$37.1 billion) went to long/short equity funds, which constitute 31.2% of the total industry.

Hedge funds were up for the sixth consecutive month in December, posting a return of 3.01%[3] for the month as global markets rallied at year‘s end on the back of an upbeat US market outlook. The Eurekahedge Hedge Fund Index posted double-digit growth in 2010, ending the year with a gain of 10.93% and beating the underlying markets by more than 3.10%. The MSCI World Index[4] was up 5.55% in December and 7.83% for the year.

Editing by Alex Akesson
For HedgeCo.net
alex@hedgeco.net
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