Hedge funds finish strongly in second quarter 2014

Cayman registers more funds

Hedge funds performed better in the second quarter of the year. The Eurekahedge Hedge Fund Index was up 1.45 percent in June and 2.26 percent in the second quarter compared with 0.90 percent in the first quarter of 2014.

On a year-to-date basis, hedge funds are up 3.16 percent but still underperform equity markets. The MSCI World Index for instance returned 4.27 percent in the first half of 2014.

During the first six months of the year, hedge funds saw performance-based gains of US$40 billion and net asset flows of US$67 billion.

North American funds were the best performers with a 5.19 percent return in the year-to-date. Japanese hedge funds posted strong returns of 2.09 percent in June and outperformed the Nikkei 225 benchmark index by 7.26 percent this year, according to data provider Eurekahedge.

Latin American hedge funds have seen five consecutive months of positive returns, up 1.34 percent in June and 2.74 percent for the year.

In terms of fund strategies, long/short equity and event driven funds delivered the best returns in June, up 1.96 percent and 1.80 percent respectively.

Distressed debt hedge fund strategies have posted positive returns in each of the past 12 months and are up 5.11 percent year-to-date.

In contrast, macro strategies remain lacklustre with a mere 0.24 percent return for the year.

More Cayman funds

In the Cayman Islands, meanwhile, a steady decline in fund registrations since 2008 ended in the second quarter of 2014. The number of funds registered, administered and licensed with the Monetary Authority reached its peak at 9,870 in 2008 but dropped precipitously to 8,568 in the first quarter of 2014. This decline was reversed in the second quarter of this year with a slight increase to 8,620.

The general drop in the number of funds has been masked by a requirement to register master funds that came into effect on 2012. Including the 2,676 registered master funds, total fund numbers increased marginally by 0.8 percent compared to the first quarter of 11,296.

However, despite the higher number of master funds the total number of funds remains below the peak of 11,379 recorded at the end of last year.

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