Hedge funds double returns through November

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Cayman Compass is the Cayman Islands' most-trusted news website. We provide you with the latest breaking news from the Cayman Islands, as well as other parts of the Caribbean.

Hedge funds as an asset class have doubled their returns to 3.53 percent through November compared to the same period last year when gains were a more modest 1.73 percent.

Industry assets contracted by US$10.4 trillion during that time, following net outflows of US$28.2 billion for the year-to-date.

Returns were spread disparately in the sector but the number of standout performers increased over last year.

Data provider Eurekahedge notes that almost 13 percent of funds with more than $1 billion under management posted double-digit returns, up from 8 percent in 2015.

Smaller funds generally performed better, with almost 20 percent of funds below $1 billion returning double-digits, compared to 17 percent in 2015. The sub-$1 billion funds have also grown their asset base by $21.9 billion, and funds in the US$250 million to US$500 million assets under management bracket have seen investor subscriptions increase from $5.1 billion in 2015 to $8.8 billion.

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In contrast, billion-dollar hedge funds have seen their asset base decline by $32.3 billion in 2016.

Regionally, European hedge funds have fared the worst among regional mandates, witnessing their assets under management decline by $21.6 billion in 2016, Eurekahedge reports. Liquidations have also outpaced launches in the European hedge fund space consistently for the past seven quarters, with 569 fund shutting down since 2015.

Relative value mandated hedge funds showed the largest asset growth and expanded close to 20 percent during the year. The underlying relative value volatility hedge funds posted gains of 7.18 percent in 2016.

Meanwhile, CTA/managed futures mandated hedge funds attracted $11.5 billion in capital this year despite mixed returns among its sub-strategies. Commodity-focused managers gained 7.72 percent for the year, outperforming trend-following and FX-focused managers which declined 1.68 percent and 2.60 percent for the year, respectively, Eurekahedge said.

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