Fund of funds outperformed single managers last year

Funds of hedge funds outperformed single managers in 2013 for the first time ever, according to data provider Eurekahedge.  

Fund of funds ended 2013 up 8.09 percent, their best performance in four years, beating single managers, who gained 8.02 percent. 

The poor average performance of single managers also had an effect on the fee structures. 

The average hedge fund management and performance fees for new launches fell to 1.4 percent and 16 percent, respectively, last year. 

Final figures for 2013 put the growth in global hedge fund assets under management at $240 billion, with performance-based gains and net asset inflows for the year at $103 billion and $137 billion, respectively. 

Hedge funds outperform stocks in January 

In January, hedge funds were down 0.48 percent, but outperformed underlying markets as the MSCI World Index declined 3.74 percent. 

Global markets trended downward during the month, led by weak U.S. jobs data and discouraging PMI numbers from China. Market sentiment weakened further toward the end of the month as the Fed announced another round of QE trimming which catalyzed investor flight from emerging economies and led credence to concerns regarding the health of the global economic recovery, Eurekahedge said.  

Emerging market currencies also came under sharp selling pressure, with markets watching carefully as the global economy transitions to a post-QE world.  

Hedge funds that invest in developed markets delivered positive returns during the month, with North American fund managers up 0.24 percent, European managers up 0.10 percent and Japanese fund managers posting their fifth consecutive months of positive returns, up marginally by 0.08 percent, according to Eurekahedge’s regional indices. 

Regional equity markets, meanwhile, declined during the period as the MSCI North America Index dropped 3.32 percent, the Nikkei 225 fell 8.45 percent and the MSCI Europe Index was down 2.06 percent. 

Emerging market investing hedge funds, in turn, came under pressure and ended the month in negative territory – down 1.78 percent.  

Greater China investing hedge funds reported losses of 1.23 percent for the month of January but still outperformed underlying markets as the CSI 300 Index declined 5.48 percent during the month.  

Latin American focused hedge funds also declined 1.84 percent but outperformed the MSCI EM Latin America Index, which plummeted 6.95 percent during the month.  

After strong net capital inflows and performance-based gains in the fourth quarter of 2013 resulted in a cumulative increase in assets under management of $63.2 billion, January broke with the trend as the industry assets under management dropped by a net $4 billion. Managers incurred performance-based losses of $5.9 billion, while net inflows were positive ($1.9 billion). 

The current AUM of the industry stands at $2.01 trillion, according to the data provider.