The flow of capital into hedge funds in Asia was up about 17x year-on-year in 2015, the only global region to show growth. Hedge fund capital flows in Asia soared to $3.9bn in 2015 compared to $220m the previous year, according to the data provider.
By comparison, the US had outflows of $20.8bn in 2015, a sharp reversal from the previous year’s inflows of $35bn. In Europe, hedge fund inflows fell to $20.2bn versus $21.9bn in 2014. Hedge fund inflows kept up quite well despite inflows into alternative Ucits funds, the mainstream alternative to offshore hedge funds, rising by 60% to €80.1bn in 2015.
In December, total hedge fund assets worldwide fell $58.2bn, reducing the industry’s total assets under management to $3trn. Investor flows were negative in that month, with an estimated net $24.6bn redeemed. Performance, or rather the lack thereof, accounted for the remaining $33.7bn decrease.
In its report, Evestment said that the industry’s large redemptions in December should not be viewed solely in the context of negative sentiment. Historically, December has been a month where redemptions far outpaced new allocations. The average December net flow over the last five years has been negative $18.2bn.
Performance of hedge funds with regional exposure in Asia was down by half to an aggregate return of 3.6% from 7.4% in 2014. Yet hedge funds focused on Asia were the best performing region globally.
Hedge fund performance
Are commodities turning?
Every major strategy and market exposure were hit by redemption pressure in December, with the exception of commodity-focused strategies.
This signals a shift in investor sentiment, though it has arguably coem a little early… Since mid-2011 through May 2015, investors made redemptions within commodities-focused strategies. However, in the last seven months ending in December, allocations were positive in all but one month.
“The inflows of $1.8bn in this stretch are an indication investors see opportunity in the commodity space,” the report said.
However, investor sentiment toward credit hedge funds remained negative, with $6.1bn in redemptions in December, following larger redemptions of $7.9bn in July and $9.9bn in October.
Sentiment towards macro funds has also been bearish following high-profile fund losses and closures. Macro funds suffered $6.6bn in redemptions in December, double the average net outflow of $3bn in the last four years.