Hedge funds round up 2017 in positive territory
Hedge funds closed the final month of 2017 in positive territory with the Eurekahedge Hedge Fund Index up 0.84 per cent in December while the MSCI World Index finished the month up 1.19 per cent.
For 2017, hedge funds were up 8.24 per cent, while underlying markets as represented by the MSCI World Index returned 17.55 per cent over the same period. Equity long-biassed hedge funds have been the star performers for 2017 returning 16.78 per cent, whilst long volatility and tail risk funds have ended at the bottom of the league tables down 11.00 per cent and 13.86 per cent respectively. Roughly 35 per cent of the fund managers have posted double digit returns in 2017, up from 19 per cent in 2016. Ongoing political and economic events hold much uncertainty in store for 2018, but in the interim, tax cuts in the US are likely to provide a further boost to equity markets.
Below are the key highlights for the month of December 2017:
Hedge funds gained 0.84 per cent in December and 8.24 per cent for annual year 2017 with underlying markets, as represented by the MSCI AC World Index (Local) up 17.55 per cent for the year. Almost 35.2 per cent of the hedge funds posted double digit returns in 2017, up from 19.10 per cent in 2016.
The hedge fund industry grew by $188.2 billion in 2017, with investor allocations of $94.7 billion while performance driven gains of $93.5 billion were recorded. In 2016, the industry shrunk by $20.0 billion, with $55.1 billion of investor redemptions driving the bulk of the industry contraction.
Among developed market mandates, Japanese managers led with annual gains of 12.77 per cent, followed by European managers up 6.93 per cent while North American managers trailed behind with 6.62 per cent returns.
Emerging market mandates have preserved their gains for the year–up 17.39 per cent with strong showing from underlying Latin America, Asia and Eastern Europe/Russia mandates. Frontier markets, as represented by the Eurekahedge Frontier Markets Hedge Fund Index is up 9.75 per cent for the year.
Asia ex-Japan mandated hedge funds were up 20.64 per cent in 2017, their best showing since gains of 38.85 per cent in 2009. Underlying Greater China and India mandated hedge funds were up 28.91 per cent and 32.06 per cent respectively for the year.
Among strategic mandates, long/short equities hedge funds posted the best performance in 2017, gaining 12.45 per cent, followed by multi-strategy and event driven hedge funds which were up 9.95 per cent and 9.55 per cent respectively.
Among volatility-focused hedge funds, short volatility hedge funds posted the best performance in 2017 with gains of 9.20 per cent, followed by relative value hedge funds which gained 3.40 per cent over the same period.