2011 was not the best year for the hedge fund industry. In fact, Eurekahedge reports that it was the second-worst year on record for the industry, down 4.1% for the year. The data provider says the hedge fund industry now totals $1.72 trillion, which is on par with figures cited by Hedge Fund Research (HFR), another data provider for the industry.
Meanwhile, HFR wrote last month in a report for the third quarter of 2011 that the number of new hedge fund launches had declined and the number of liquidations rose in that quarter. Eurekahedge, however, says 2011s total of 1,100 launches was higher than usual, although capital raising became increasingly challenging.
Both data providers pointed to the European sovereign debt crisis as contributors to the poor results for the year.
Despite the woebegone statistics, the hedge fund industry still fared better than the overall equities markets, with the MSCI World Index down 9.9% for the full year. And the industry continued to grow in 2011, with Eurekahedge recording inflows of $67 billion into hedge funds for the year.
Since it launched the Capital Movement Index in April, which tracks inflows and outflows of its hedge fund clients, fund administrator GlobeOp recorded only two months of outflows in 2011: April, at 0.05%, and July, at 0.2%. In all other months inflows ranged from around 1-3%.
Most hedge funds recorded gains in the first half of the year, Eurekahedge says, but as in the equities markets the volatility of the second half slashed overall returns. Latin American and North American hedge funds fared the best, with a gain for the year of 2% and a loss of 0.8%, respectively. Eurekahedge says fixed income and arbitrage were the best performing strategies for the year, respectively up 1.5% and 0.6%.
(CG)