By Hedge Fund Insight staff
Hedge Fund Insight has commented this year on Emerging Market (EM) hedge fund returns and capital flows in the context of the six month rule (see Emerging Market Hedge Fund Demand – The Six Month Rule in Action). The monthly report from eVestment on hedge fund industry capital flows remarked on the same subject. The second table below also reflects the simple relationship between returns and subsequent flows which is behind the six month rule: last year’s return winners are this year’s capital flow winners.
Interest in EM strategies faded in July
Despite the seven consecutive months of very strong relative returns from EM strategies compared to their developed markets peers, EM strategies were not able to attract net new assets for a third consecutive month in July. Redemptions were not high, however, and outﬂows seemed to be targeted to a handful of underperforming strategies. While aggregate data appears negative, at the fund level it does not appear sentiment has shifted back to
Equity exposure drives Europe-domiciled inﬂows
The main Europe-based asset gainers in July were the same products which have been successful at raising new capital for most of the year. This includes both global and Europe-focused long/short equity funds, as well as a handful of macro managers. The one segment weighing on European fund flows in 2017, which was also negative in July, is managed futures.
It is notable that according to eVestment’s data European hedge funds have gathered nearly as much capital in the last three months as American domiciled hedge funds have all year.
eVestment is a fund management data analysis firm that provides a flexible suite of easy-to-use, cloud-based solutions to help the institutional investing community identify and capitalize on global investment trends, better select and monitor investment managers and more successfully enable asset managers to market their funds worldwide.
6-month rule: CTA Capital Flows Positive For Six Months Straight (July 2015)
European Hedge Fund Industry May Rouse (July 2017)
Asset Flows in 2016 – Multi-Strategy and Macro/CTAs Seen As Beneficiaries (Jan 2016)
Chart of the Day: Cycles of Equity Hedge v Non-Equity Hedge Flows (Oct 2014)