HFN industry overview: April 2011
May 31, 2011 with 4,117 hedge fund products, reporting, HFN Hedge Fund aggregated Index was + 1.42% in April and + 2.79% the year 2011, while the S & P 500 Total Return Index (S & P) was + 2.96% during the month and + 9.06% YTD.
Hedge fund industry highlights April:
• Total industry assets increase estimated at 2.26% to $ 2607 trillion in April. Performance accounted for the majority of the asset increases and net investors funds were positive for the 10th month.
• A falling US dollar and higher energy and precious metals resulted in strong results from foreign currency and natural resource strategies in April.
• Healthcare funds presented best equity market sector-oriented performance in April followed by the technology funds. Despite rising energy prices, energy sector fund equity returns below average.
• Japan focused funds again was negative during the month, Japan Index was 0,74% in April and 0.66% YTD.
CTA/managed futures and global macro strategies were the primary beneficiaries of the US dollar plunge into other major currencies, together with the increase of gold and almost 30% collection in silver prices. However, bond falling yield on United States's 10-year note, wounded several funds focused on Government related strategies. The Group was-0.02% in April to a few strong return from funds focused on EM sovereign credits.
HFN developed outliers ratio to determine which sectors producing high or low earnings outside of their normal ranges. Surprisingly, in April, mortgage focused funds had the lowest average ratio despite HFN Mortgage Index increases + 1.49%. Health care, the CTA, macro, technology and fusion arbitrage funds all had over average conditions in April. Convertible and credit arbitrage, along with mortgage strategies all had low numbers.
HFN regional benchmarks
Emerging market strategies again outperformed developed market focused resources in April, led by those investing in Brazil and China returned an average of + 2.34% and + 2.13%, respectively. Russia focused funds fell in the month,-1.54%, but is still the best regional classification 2011, + 4.38%.
Japan funds continued to struggle in the aftermath of the March natural disaster covered by 0,74% in April, while the Nikkei dropped + 0.97%. Japan funds lost an average of-5.30% over the last two months, driving the HFN Japan Index to negative territory for 2011. April was a rare instance of Japan funds be negative on average when the Nikkei rises. This happened only three other times in the last five years. In every previous occasion Nikkei bouncing off of a huge loss.
Monthly access Flow estimates
• Estimated Total hedge fund assets at the end of April 2011 was $ 2607 billion, an increase of 2.26%, or 57.6 billion dollars from March.
• Performance accounted for an increase of 41.2 billion dollars and investors accounted for a net inflow of 16.5 billion dollars.
• The merged core (% access change due to investor funding/redemption) growth 0,65%, an increase from March, and over the last 12 month average.
• Total the notorious AUM is now 13% over the historic high set in the second quarter of 2008.
Net flow information, investors continue to show interest to invest directly into hedge funds. April inflow showed the tenth straight month of net appropriation and the Central growth was the second largest in 2011. The average growth over the past 12 months is 0.40%
Some sector specific feeds
• Japan fund investors flow data has been mixed, but the majority of the data reported to the HFN specify more funds were net investor inflows in April than the outflows.
• Commodity, credit arbitrage and macro strategies had the highest proportion of allocations in April. Emerging markets, market neutral equity and multi-strategy Fund information net redemptions.
• Managers located in developed Europe had the highest proportion of allocations in April followed by Asia, then North America.
• Funds with Europe as an investment region had also positive investor flows in April while they focused on Latin America and emerging Europe had net outflows.
Performance Review
Fixed income (FI) strategies
• The average return of all fixed income focused strategies was + 0.93% in April and + 3.30% this year.
• Distressed credit funds performed best in April, + 1.77% and mortgage funds continued to post positive return, + 1.39%.
• Fixed Income Fund's assets increased 1.84% in April to an estimated 684.8 billion dollars. Investors to NET $ 5.7 billion during the month.
Equity capital (EQ) strategies
• The average return of all equity focused strategies was + 1.11% in April and + 2.60% YTD.
• Funds investment in the health sector shares had the best return, + 4.60%, followed by those who invest in technology stocks, + 1.61%. Financial sector medium-low, but were positive, + 0.66%
• Equity assets increased approximately 2.72% to 858.6 billion dollars in April. Investors allocated NET 8,4 billion dollars during the month. a sharp increase from March.
Commodity and foreign exchange (FX) related strategies
• Broad natural resource commodity strategies was + 3.08% in April and + 3.56% YTD.
• Funds that invest in FX markets had its best month in more than four years, + 2.67%, and is + 1.61% YTD
• Funds focusing on metals markets are carried out, + 2.82%, as well as energy commodity funds (not EQ energy sector), + 2.20%. AGRI-focused funds lagged, + 0.18%, with relatively volatile return of fund performance.
Summary analysis
Investors ' interest in April continued to be above the 2010 rates, which has been the case in each of the first four months of 2011, proof that the big investors continue to increase funding for industry despite the performance is equity markets. With can come to a close and equity markets as broadly lower, it turns out that at least one month of the year in industry will surpass. Long/short equity strategies have lagged the S & P of the monthly average of 156 points this year, an indication of general defence reaction. It is probably for the benefit of multiple strategies in may, but reverse the April the development of a declining US dollar will likely result in lost in the macro and CTA strategies.
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