European hedge fund sector: 7th consecutive month of positive returns

- Hedge funds witnessed 5th consecutive month of net allocations & 7th consecutive month of positive returns – up 4% May year-to-date - Total asset flows for 2013 currently stand at US$56.9 billion - Asia ex-Japan hedge funds outperformed underlying markets for three consecutive months - Eurekahedge is currently tracking almost 500 funds that have delivered more than 15% year-to-date and more than 250 funds that are up more than 20% year-to-date - Distressed debt funds extend winning streak to 11 consecutive months, gaining 22.68% since end-June 2012 - CTA/managed futures funds declined 1.81% in May 2013 Performance update Hedge funds witnessed the seventh consecutive month of positive returns in May amid mixed returns in global markets. The Eurekahedge Hedge Fund Index was up 0.32%[1] during the month, while the MSCI World Index[2] declined by 0.45% in May. May started off on a good note with positive economic data from the US, leading to rallies in global equity markets, specifically in North America where market indices reached all-time highs. The US dollar strengthened against most major currencies, going above 100 level against the Japanese yen for the first time since 2009. The positive sentiment turned mid-month amid weak manufacturing numbers from China and uncertainty regarding the withdrawal of the US Federal Reserve’s asset purchase program. May 2013 and April 2013 returns across regions Most major hedge fund investment regions delivered positive returns May, with Asia ex-Japan hedge funds reporting the strongest returns during the month. The managers outperformed the market for the third consecutive month gaining 2.04% in May while the MSCI Asia Ex Japan Index[3] was down 4.35% - the largest returns were posted by funds focused on Greater China, up 4% in May. The Eurekahedge Japan Hedge Fund Index was down 0.15% in May, bringing its year-to-date return to 17.68%, and ending the eight-month winning streak of Japan focused hedge funds. The month’s return represents an outperformance by the managers as the Nikkei 225 declined 0.62% while the Tokyo Topix was down 2.52% during May. Japanese markets witnessed some volatility during the month as the Nikkei fell 7.3% in a single day, amid concerns about US stimulus, before rallying at the month end after some positive announcements from the Japanese central bank. The Eurekahedge North American Hedge Fund Index was up 1.06% in May bring it’s year-to-date return to 4.46%. The S&P 500 was up 2.08% in May but witnessed a mid-month trend reversal, declining to 1630 after reaching an intra-day high of 1687 in the fourth week of May. This trend was also witnessed across European bourses, however most European indices finished the month higher holding on to gains generated after the ECB’s rate cut. The Eurekahedge European Hedge Fund Index was up 0.90% during the month. Mizuho-Eurekahedge Asset Weighted Index The asset weighted Mizuho-Eurekahedge Index was down 0.89% in May as some of the largest constituents of the index underperformed. Since the Mizuho-Eurekahedge Index is US dollar denominated, during months of strong US dollar gains, the index results include the currency conversion loss for funds that are denominated in other currencies – hence the negative returns for the index. Adding to the currency conversion loss were a few large CTA/managed futures and macro investing funds which posted negative returns for the month. The largest returns in May were delivered by funds focused on the mainland China equities. Among the main regional mandates only Asia ex-Japan managers posted flat-to-slightly-positive returns. Asset flows update Hedge funds posted marginally positive returns in May amid mixed returns in global markets. The Eurekahedge Hedge Fund Index was up 0.32%[4] during the month as some risk aversion returned to the markets leading to mid-month trend reversals. The MSCI World Index was down by 0.45%[5] during the month. Total assets under management (AUM) increased by US$3.1 billion during May, bringing the size of the industry to US$1.88 trillion. Impact of performance on total assets was slightly negative in May as managers lost US$1.5 billion over the course of the month. On the other hand net flows were positive for the fifth month running with US$4.6 billion in net allocations.

Hedge funds attract US$50 billion in five months

Hedge funds witnessed the seventh consecutive month of positive returns in May amid mixed returns in global markets. The Eurekahedge Hedge Fund Index was up 0.20% during the month, while the MSCI World Index was down 0.45% in May. Key highlights for May 2013: - Hedge funds witnessed the 5th consecutive month of net allocations and 7th consecutive month of positive returns - up 3.89% year-to-date - Total asset flows for 2013 currently stand at US$50 billion with total size of the industry at US$1.87 trillion - Asia ex-Japan hedge funds outperformed underlying markets for three consecutive months - up 3.26% since end-February - Eurekahedge is currently tracking almost 500 funds that have delivered more than 15% year-to-date and 250 funds that are up by over 20% year-to-date - Distressed debt funds extended winning streak to 11 consecutive months, gaining 21% since end-June 2012 - CTA/managed futures funds declined by 1.69% in May 2013 Regional Indices May started off on a good note with positive economic data from the US, leading to rallies in global equity markets, specifically in North America where market indices reached all-time highs. The US dollar strengthened against most major currencies, going above 100 level against the Japanese yen for the first time since 2009. The positive sentiment turned mid-month amid weak manufacturing numbers from China and uncertainty regarding the withdrawal of the US Federal Reserve’s asset purchase program. Most major hedge fund investment regions delivered positive returns in May, with Asia ex-Japan hedge funds reporting the strongest returns during the month. The managers outperformed the market for the third consecutive month gaining 2.35% in May while the MSCI Asia Ex Japan Index was down 4.35% - the largest returns posted by funds focused on Greater China, up 4% in May. The Eurekahedge Japan Hedge Fund Index grew 0.42% in May, bringing its year-to-date return to 18.34% and extending their winning run to the ninth month making it the longest winning streak on record for Japanese funds. The month’s return represents an outperformance by the managers as the Nikkei 225 declined 0.62% while the Tokyo Topix was down 2.52% during May. The Japanese markets witnessed some volatility during the month as the Nikkei fell 7.3% in a single day, amid concerns about US stimulus, before rallying at the month end after some positive announcements from the Japanese central bank. The Eurekahedge North American Hedge Fund Index was up 1.06% in May bringing its year-to-date return to 4.46%. The S&P500 was up 2.08% in May but witnessed a mid-month trend reversal, declining to 1630 after reaching an intra-day high of 1687 in the fourth week of May. This trend was also witnessed across European bourses, however most European indices finished the month higher holding on to gains generated after the ECB’s rate cut. The Eurekahedge European Hedge Fund Index grew 0.83% during the month. Strategy Indices Returns were mixed among the different strategic indices, with distressed debt hedge funds posting the strongest gains of 1.87%. Distressed debt managers have witnessed eleven straight months of positive returns, gaining 21% since end-June 2012. The distressed debt sector gained earlier in the month from the positive sentiment around global economic data while the ECB rate cut triggered rallies in the European distressed bonds sector, but the increased risk aversion at the end of the month led to some losses. The BofA Merrill Lynch High Yield Index was down 0.43% in May. CTA/managed futures funds posted the largest negative returns during the month, declining by 1.69% on average. Trend-followers suffered due to the reversal in market sentiment mid-month, although some short-term systematic funds witnessed some gains. A number of managers also reported losses from the energy and precious metals sector. On the other hand some managers investing in FX delivered positive returns gaining from short AUD/USD positions.