Singapore Hedge Fund

Alternative asset management in Singapore

June report: Hedge Funds Little Changed, Drew $4 Billion

Hedge funds had net inflows of $4 billion in June as the index measuring their performance remained little changed after posting its longest stretch of monthly gains since July 2007, according to Eurekahedge Pte.

The industry had net inflows for the second consecutive month, bringing total assets under management to $1.33 trillion, according to a preliminary report by the Singapore-based research firm, based on the 35 percent of funds that reported June performances. The Eurekahedge Hedge Fund Index, tracking more than 2,000 funds, lost 0.02 percent, taking its year-to- date advance to 9.4 percent, the report showed.

The stall in performance by hedge-fund managers, who posted the worst year on record in 2008, came as the MSCI World Index declined for the first month in four in June, losing 0.6 percent.

“There is such a dichotomy in views at present that many investors are a bit frozen in their tracks for the near term,” said Kirby Daley, a senior strategist in Hong Kong with Newedge Group’s prime brokerage business. “It may be a slow summer for flows into hedge funds, but we expect moving into the fall, these will pick up again as investors need to get money working.”

About 250 new hedge funds started in the first half, while more than 370 closures were confirmed, Eurekahedge said. In 2008, 603 funds started, while 859 closed, the firm said.

Five out of Eurekahedge’s seven regional indexes rose in June, with Asian and Latin American managers as the best performers, the report showed. The Eurekahedge North American Hedge Fund Index added 0.7 percent.

Asian Gains

In Asia, gains in the stock markets of countries including Japan, Hong Kong and China buoyed funds, while in Latin America, the strengthening of the Brazilian real helped, the firm said.

The Eurekahedge Asian Hedge Fund Index climbed 1.8 percent, the best performing region, while the measures tracking Japan and Latin America followed, advancing 1.5 percent and 1.3 percent, respectively.

The Eurekahedge Eastern Europe & Russia Index and the measure tracking European hedge funds lost 2 percent and 0.4 percent respectively, as weakness in the region’s banking sector pushed stocks lower, Eurekahedge said.

Seven out of nine Eurekahedge measures tracking different hedge-fund strategies rose. Managers investing in fixed income had an average 2 percent return, the best performance, profiting from bets to sell U.S. Treasury bonds on speculation the Federal Reserve may raise interest rates in the near future, it said.

Macro-Fund Managers

Macro-fund managers, who wager on trends in stocks, bonds and currencies worldwide, and managers who trade futures, known as commodity trading advisers or CTAs, were the two strategy groups that posted declines in June partly owing to the lack of direction in commodity markets, Eurekahedge said.

Eurekahedge’s global index slid 12 percent last year, the most since the Singapore-based firm began tracking data in 2000. In May, the industry recorded net inflows for the first time in 10 months, gaining $1.5 billion, while total assets rose by $5 billion, Eurekahedge said last month.

Hedge funds are mostly private pools of capital whose managers participate substantially in the profits from their speculation on whether asset prices will rise or fall.

Eurekahedge plans to release a full report later this month.

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