New York (HedgeCo.Net) – Hedge fund performance was flat to slightly negative in June as global markets witnessed several trend reversals during the month. The Eurekahedge Hedge Fund Index registered a marginal loss of 0.14% during the month, bringing its June year-to-date figure to 1.38%. In comparison the MSCI World Index was up 3.65%.
June proved to be a tough month for hedge fund managers with frequent trend reversals and shifts in risk sentiment making it a difficult environment to operate in. The first half of the month witnessed positive movements in the markets amid expectations of stimulus by the US Federal Reserve and the election of pro-bailout parties in Greece. The second half of the month witnessed an increase in risk aversion amid concerns about Spanish banks but positive developments at the European Union leaders’ summit between June 28th and 29th led to a month-end rally
Highlights from May 2012:
• Despite hedge funds facing a slow start to the year, the Eurekahedge Hedge Fund Index was flat in June and up 1.4% for the year, over 500 funds are up more than 10% year-to-date.
• North American and emerging market relative value funds are the first half winners with gains of 8.8% and 8.7% respectively.
• Luxembourg is now the third most popular domicile for funds in the world, after the Cayman Islands and Delaware, since the explosion in popularity of UCITS hedge funds.
• 75% of the prime brokerage business in the hedge fund industry is covered by six banks. While hedge funds diversified their relationships across multiple prime brokers post-Lehman’s collapse, they are still focused on the main institutions increasing the issues in the current ‘too-big-to-fail’ financial environment.
• The administrator business is much more diversified than the prime broker business with only seven firms having a more than 5% market share with the top four controlling 35% of the market.
• The Mizuho-Eurekahedge Asia ex-Japan Index was up 1.38% in June, showing that larger regional funds outperformed their peers.
• Relative value hedge funds witnessed six months of back-to-back net inflows, raising more than US$7 billion.
• Funds charging higher fees delivered better performance in June 2012 year-to-date, and over the last four years.
• North American fixed income and relative value hedge funds gained 2% and 2.63% respectively in June.
• Hedge funds posted negative returns for the fourth consecutive month in June, the longest losing streak since 2008.
Total assets under management (AUM) decreased by US$8.2 billion, bringing the size of the industry to US$1.73 billion. Most of the decreases in assets were due to performance-based declines, as some of the larger hedge funds posted losses for the month, accounting for US$6.62 billion. Managers also witnessed negative net asset flows of US$1.61 billion during the month.
