Hedge funds see inflows despite losses in first half of 2016

Total hedge fund assets grew by $19.9 billion

In May and June managers reported performance-based gains and net asset outflows.

The hedge fund industry continued to grow globally to US$2.26 trillion in assets under management despite the losses hedge funds suffered during the first half of 2016.

Total hedge fund assets grew by US$19.9 billion in the first six months of the year as a result of US$25.1 billion in investor inflows that were offset by performance-based losses of US$5.2 billion during the period, according to data provider Eurekahedge.

However, the picture reversed in May and June when managers reported performance-based gains of $5.4 billion and $7.9 billion and net asset outflows of $0.8 billion and $3.5 billion, respectively.

In its July 2016 report, Eurekahedge noted that since January 2013, the global hedge fund industry has generated performance-based gains of $211.7 billion and attracted $278.2 billion of investor allocations.

North American hedge funds, which account for $1.49 trillion of the industry’s assets under management, saw the strongest growth with $12.2 billion net asset inflows and performance-based gains of US$2.7 billion, or 2.8 percent, in 2016.

New allocations went particularly to equity market neutral and the best performing CTA/managed futures funds, which returned 4.33 percent during the first six months of the year.

European managers, meanwhile, recorded moderate net inflows and small losses during the period. Total assets in European hedge funds stand at $538.0 billion, slightly higher than the December 2015 high of $535.1 billion.

A total of 372 hedge funds shut down this year as fund liquidations outpaced launches in both quarters of 2016. In Europe, fund closures have outpaced launches for six consecutive quarters, with a total of 484 funds liquidating since 2015.

Cayman Islands

The number of Cayman-based funds increased slightly from 10,965 to 11,019 in the second quarter of this year. Cayman Islands Monetary Authority statistics show that registered funds, which have seen a steady decline for the past six years, also increased marginally during the quarter, from 7,646 to 7,661. The remainder of the increase was the result of more registered master funds, up 41 to 2,882.