Equity Long Bias Strategy Tops Hedge Fund Performance in 2019

Hedge funds globally had some $2.3 trillion in assets under management at the end of October in 11,099 funds, according to the November Eurekahedge report, released this week.

North American funds represented 68.9% of total assets, $1.6 trillion in 5,492 funds. Europe, Middle East & Africa followed with 20.4% of assets, $463 billion in 3,781 vehicles.

Asia ex-Japan, Latin America and Japan together had $244 billion under management in 1,826 funds.

The report showed that hedge funds returned 0.4% across all strategies in October, and were up 6.8% for the year to date based on the 83% of funds that had reported October performance by Nov. 28. North American funds lagged all other regions in October, up 0.3%, bringing year-to-date performance to 6.1%.

Asian funds topped regional performance in October with a gain of 1.8%, followed by Latin American funds, up 1.5%, and European funds, up 0.7%.

The best-performing strategy for the year through October is equity long bias, up 11.5%. Other strategies:

• Macro: 7.8%
• Long/short equities: 7.4%
• Fixed income: 6.5%
• Short volatility: 6.4%
• Multi-strategy: 5.9%
• Event-driven: 4.7%
• Arbitrage: 4.3%
• Commodity: 4.3%
• Trend-following: 4.2%
• CTA/Managed futures: 4%
• AI: 4%
• Relative value: 2.8%
• FX: 2.1%
• Distressed debt: 1.1%
• Equity market neutral: 0.8%

Only relative value volatility, tail risk and long volatility strategies reported losses in October: 1.6%, 4.6% and 8.1%.

For the year through October, performance growth put $107.5 billion into hedge fund coffers globally, but this was exceeded by investor outflows of $127 billion. Only North American funds had greater performance growth than outflows: $76.5 billion vs. outflows of $56.7 billion.

The long/short equities strategies dominated both sides of the ledger for the year to date, with performance growth of $54.6 billion and investor outflows of $69.3 billion.

So far in 2019, 502 new hedge funds have been launched and 548 closed. In North America, 154 funds rolled out and 253 closed. In Europe, managers launched 295 funds, and closed 229.

Long/short equities have had 177 entrants and 199 departures, CTA/managed futures followed with 93 launches and 76 closures.

The Eurekahedge report said that by the end of 2019, average hedge fund management fees would be 1.4% globally, down three basis points from 2018, and performance fees would average 16.19%, down 32 basis points from the year before.