Tokyo: The global hedge fund industry attracted an estimated $4.1 billion (Rs19,393 crore) in new money from investors in November, even as performances dropped for a sixth straight month, according to Eurekahedge Pte. Ltd.
The inflow was swamped by $57.3 billion in redemptions, according to a report posted on the website of Singapore-based Eurekahedge. Distressed debt investment funds were the only strategy that attracted new money because of the attractive valuations in the credit and high-yield markets, the report said.
It expected trend-following and arbitrage strategies in the commodity and currency markets to be profitable in the near term, while opportunistic or value bets in the credit markets promised longer-term gains, said the independent data provider and research house in the report. Performance-based gains in assets were made in Japanese, Latin American funds, managed futures funds, which trade futures of stocks, bonds and commodities, and event-driven funds that invest in companies going through corporate actions such as takeovers and spinoffs, the report said.
Hedge funds lost $94.3 billion in November due to market declines, while gains totalling $76 billion were made in some funds. That pushed the decline in hedge funds for the month to $71.5 billion, Eurekahedge said, based on preliminary figures taken from 59.2% of the funds it surveyed as of 15 December.
Hedge funds fell 0.8% on average in November with 67% of the funds reporting, as measured by the Eurekahedge Hedge Fund Index, which tracks the performance of more than 2,000 funds that invest globally. The final figure for the month may be a 2% decline, said Eurekahedge, which typically receives data from poorer performing funds later. The sixth monthly drop is the longest ever losing streak based on Eurekahedge data.
The slump takes declines to about 13% this year as hedge funds accelerate job cuts and brace for the biggest annual losses and investor withdrawals since at least 2000, according to Eurekahedge data.
Distressed selling and the rollback of debt-funded investments continued to pull down funds as the credit crisis sent the US, Europe and Japan into the first simultaneous recession since World War II. The MSCI World Index slumped 6.7% last month. Hedge fund industry assets peaked at about $1.9 trillion in June, and have fallen about 20.5% to $1.55 trillion, Eurekahedge data show.