Long/short equity funds were the best performing strategy, rising 1.82% over the month. CTA/Managed futures strategies reversed a five-month run of negative performance, rising 1.02% on average. Over the month, the MSCI World index was up 3.75%.
Long/short equity funds also lead the performance tables for the year to date. The sector has risen 11.43% since the start of 2013. It also continues to see the strongest inflows, at $1.4bn for October and $67.1bn for the year to date. Distressed debt is the other significant outperformer for the year to date, with the average fund up 12.18%, but saw the weakest rise in assets in October.
In aggregate, European hedge funds have seen positive inflows of around $50bn for the year to date. This reverses a five-year run of outflows for hedge funds in the region. During October, European and Asian hedge funds saw inflows, while US and Latin American funds saw outflows. Eurekahedge attributed these outflows to profit-taking and portfolio readjustment.
Globally, hedge funds have raised US$100 billion through asset flows in 2013 as at October year-to-date with total assets in the hedge fund industry reaching new record highs of US$1.97 trillion. There are signs that investors are willing to take more diverse risks and assets in Greater China-focused funds reached US$12.9 billion, the highest level on record.
Since 2009, fund closures have exceeded fund launches across the hedge fund industry. This trend continued in September (the most recent data).
Although the average management fee for hedge funds continues to decline and now stands at 1.2% on average, performance fees have risen over 2012. On average performance fees are now 7.7%, compared with 6.7% for 2012.
The survey also found that redemption periods for many hedge funds were reducing, from an average of two months in 2007 to an average of one month. In September the average redemption period was 34 days, down from 43 days in 2012.