Hedge funds reach $1.7 trillion AUM

The Eurekahedge report for March 2001 shows healthy growth in hedge fund industry as assets under management cross the $1.7 trillion mark for the first time since the start of the financial crisis

Hedge funds reached $1.7 trillion of assets under management for the first time since September 2008, according to the Eurekahedge report for March 2011.

According to the report’s results, hedge funds attracted $30bn of net inflows in January and February this year while the Eureka Hedge Fund Index gained 1.09% during February.

Eureka Hedge predicts that the industry could even move past the $2 trillion mark by the end of the year if hedge funds increase their performance by 10% and bring in an extra $130bn of new inflows.

“Market sentiment was buoyant through most of the month, leading to rallies in underlying markets,” Eurekahedge said in the report.

Growth relating to performance was also up in February, where the industry gained $10bn as managers made positive returns on the back of resurgent markets, according to Eurekahedge.

In terms of regions, Japanese hedge funds came top with gains of 2.62% in February, where the Nikkei 225 rose by 3.77%. This is likely to change however following the earthquake and tsunami that hit Japan last week. 

European hedge funds also did well with gains of 0.55%, while funds investing in Eastern Europe and Russia generated returns of 1.22%. 

It was a disappointing month for Asia ex-Japan hedge funds, however, which had losses of 1.32% and the MSCI Asia Pacific ex-Japan Index declined by 2.36%.

In other markets, North American hedge funds gained 2.16% in February where the S&P 500 rose by 3.2%.

The report also revealed that hedge funds investing in distressed debt have had the best performance in 2011 so far with a gain of 2.22% last month.

Meanwhile, assets in CTA/managed futures hedge funds reached record high of $200bn.