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May 22, 2008
Hedge fund assets reach an estimated $2.848 trillion in Q1 2008
HedgeFund.net today released the Q1 2008 Hedge Fund Asset Flows & Performance Report. The report estimates total hedge fund assets fell 1.4% in Q1 2008 to $2.848 trillion. The release is concurrent to the release of the HFN Q1 2008 Administrator Survey which shows total administered hedge fund assets were $2.759 trillion in Q1. The combination of results from these two reports confirms our belief that hedge fund assets are significantly greater than commonly reported.
Following are broad industry asset flow trends worth noting:
Hedge Funds:
New allocations to hedge funds were an estimated $53.02 billion during the quarter and performance losses decreased assets by an estimated $93.18 billion resulting in total hedge fund assets experiencing a quarterly decrease for the first time on record. The 1.4% decrease in Q1 2008 compares to an increase of 11.5% in the first quarter 2007.
Funds of Hedge Funds:
Fund of funds’ assets increased during Q1 2008, despite performance losses as new allocations were the second highest in almost four years. Total assets in funds of funds increased 1.1% to an estimated $1.404 trillion. Performance losses of $57.19 billion were offset by new allocations of an estimated $71.85 billion, an indication that large institutions continued to increase exposure to the hedge fund industry through funds of funds.
Equity vs. Debt Focused Hedge Funds:
Allocations between fixed income versus equity focused funds showed interesting trends in investor sentiment in Q1 2008. Funds focusing on fixed income markets saw net increases in new allocations while funds focusing on equities experienced a net decrease in assets from redemptions from existing funds. This is an indication investors see greater opportunity in fixed income markets in 2008. New allocations increased total asset levels in fixed income funds by 4.8%, but performance losses resulted in total estimated assets increasing only 3.6% to $554.79 billion. Equity focused fund assets fell 0.6% due to redemptions. With performance losses, total assets in equity focused funds fell 5.4% in Q1 2008 to an estimated $1.038 trillion.
Broad Emerging Markets:
Emerging market hedge funds experienced their largest drop on record in Q1 2008. Total asset levels fell 5.5% in Q1 due entirely to performance losses estimated at $27.80 billion. New allocations of $9.45 billion resulted in organic growth (asset growth independent of performance gains or losses) of 2.9%. This is greater than the near zero organic growth in Q4 2007, but well below the quarterly historical average rate of 8.3%.
Latin America:
Total assets in funds focusing in Latin America experienced the largest percentage gain of any region in Q1 2008. Total asset levels rose 29.8% to an estimated $21.28 billion due to new fund launches and new allocations to existing funds which contributed an estimated $5.11 billion to funds focusing on the region. LatAm funds were the best performing regionally focused EM funds in Q1 2008.
Eastern Europe and MENA:
Funds focusing on emerging Europe had total asset levels drop 10.4% to an estimated $92.73 billion due entirely to performance losses of $11.50 billion. New allocations of $700 million were the lowest in the last four quarters. MENA focused fund assets experienced organic growth of 13.5% in Q1 2008 as an estimated $529 million in new allocations helped increase total asset levels in MENA focused funds 8.4% in Q1 2008 to an estimated $4.26 billion.
Distressed:
Despite equal weighted average returns from distressed funds being negative in Q1 2008, good performance from larger funds helped total asset levels in the strategy to rise. Performance gains along with new allocations of $6.04 billion resulted in total assets in distressed funds rising 3.3% in Q1 2008 to an estimated $252.32 billion. Organic growth during the quarter of 2.0% is well below the historical average of 7.0% and record Q1 2007 growth of 16.3%.
CTA/Managed Futures:
CTA/Managed Futures funds produced the best average performance in Q1 2008 and total asset level increases surged from this growth. Total asset levels in CTA/Managed Futures funds increased 15.3% in Q1 to an estimated $196.03 billion. New allocations of $10.2 billion were the second largest quarterly increase in new allocations on record. Organic growth during the quarter was 5.7%, well above the historical average rate of 3.4%.
Energy Sector:
Energy sector fund assets experienced their largest drop on record in Q1 2008. Total assets fell 12.8% to an estimated $122.20 billion due mostly to performance losses of $12.91 billion. Net redemptions and liquidations resulted in an additional $5.05 billion exiting energy sector funds in Q1. Redemptions were likely the result of large monthly loses in the sector in November 2007 and January 2008. The average energy sector fund was down 5.4% in Q1 2008.
The full report provides asset flow and performance data for over 70 different regions, asset classes, sectors and strategies in which hedge funds invest.
-HedgeFund.net-
Posted by su at May 22, 2008 2:40 PM