The Eurekahedge Report - December 2019

December 2019 | Eurekahedge

The benchmark Eurekahedge Hedge Fund Index was up 0.90% in November and 7.27% year-to-date. Total assets under management increased by US$2.3 billion during the month as the sector witnessed performance-based increase of US$6.0 billion while registering net asset outflows of US$3.7 billion. The total size of the industry now stands at US$2,275.9 billion.

Asset Flows Update

December 2019 | Eurekahedge

The Eurekahedge Hedge Fund Index gained 0.90% in November, bringing its year-to-date return to 7.27%. The global hedge fund industry has been supported by the global equity market rally on the back of optimism over the US-China trade negotiation progress and dovish central bank policies throughout the year. Positive geopolitical developments surrounding the trade war and Brexit have also sustained investors’ risk sentiment over the recent months. Returns were positive across regions, with North American fund managers returning 1.59% in November, on the back of the region’s equity market performance which resulted in a new all-time high for the S&P 500. On a year-to-date basis, fund managers focusing on Asia ex-Japan were up 9.42% over the first 11 months of the year, outperforming their North American peers who returned 7.86% over the same period.

Hedge Fund Performance Commentary

December 2019 | Eurekahedge

The Eurekahedge Hedge Fund Index was up 0.90% in November, supported by the market’s optimism towards the progress of the US-China trade talks. The underlying equity market as represented by the MSCI ACWI (Local) gained 2.76% over the same period. US equity markets recorded new all-time highs during the month, as a result of the strong corporate earnings combined with the positive geopolitical development. European equities also pushed higher as Germany narrowly avoided recession, defying market expectations. The CAC40 and DAX gained 3.06% and 2.87% over the month. Over in Asia, the enactment of the Hong Kong Human Rights and Democracy Act was seen as a possible headwind against the progress of the ongoing US-China trade negotiations, weighing on the region’s risk outlook. Meanwhile, the wait-and-see approach of the Fed and the ECB towards their policies pushed the yields of the sovereign bonds higher during the month, resulting in the weakness of the government bond market.

Hedge Fund Round-Up 2019

December 2019 | Eurekahedge

Hedge fund managers have returned 7.27% as of November 2019 year-to-date, supported by the global equity market recovery throughout the year. Optimism over the progress of the US-China trade talks and accommodative central bank policies since the beginning of the year have acted as tailwinds for the hedge fund industry, resulting in positive performance for most geographic and strategic mandates for the year. The global hedge fund industry AUM currently stands at US$2,272.8 billion, down US$19.5 billion year-to-date as investor redemptions persisted in spite of positive performance-driven growth.

2019 Key Trends in European Hedge Funds

December 2019 | Eurekahedge

The Eurekahedge European Hedge Fund Index was up 5.16% as of October 2019 year-to-date, supported by positive geopolitical developments surrounding Brexit and accommodative ECB policies. The region’s underlying equity market, as represented by the MSCI AC Europe IMI gained 15.79% over the same period. The slowing economic growth in the region remained as the central bank’s primary concern, particularly after Germany’s gross domestic product contracted in Q2 2019, raising concerns over a recession. In response, the ECB enacted a deposit rate cut and restarted their asset purchase programmes in September, which boosted the equity market in the region. The DAX and CAC40 were up 21.86% and 21.12% respectively since the start of the year. The UK market was spooked by PM Boris Johnson’s firm stance towards no-deal Brexit and decision to prorogue the parliament in August, resulting in a 5.00% decline of the FTSE100 over the month. However, the situation has reversed as the PM reached an agree

European Hedge Funds Infographic December 2019

December 2019 | Eurekahedge

Eurekahedge’s European hedge funds infographic sums up the industry as at December 2019. Find out more about European hedge funds assets under management (AUM), asset flows into strategic and regional mandates, strategy returns, fund size and geographic AUM, head office locations and the best and worst performances of the year.

Interview with Stefan Wattinger, ILS Product Specialist, Credit Suisse Insurance Linked Strategies Ltd

December 2019 | Eurekahedge

Stefan Wattinger is the ILS Product Specialist of Credit Suisse Insurance Linked Strategies Ltd., which manages a number of funds focused on insurance linked investments.

OSC’s Regulatory Burden Reduction Proposals - Potential Benefits to Investment Funds and Registrants

December 2019 | Rebecca A. Cowdery, Ronald M. Kosonic, Lynn M. McGrade, Donna Spagnolo and Michael Taylor - Borden Ladner Gervais LLP

On November 19, 2019, the Ontario Securities Commission released Reducing Regulatory Burden in Ontario’s Capital Markets (the Report). The Report responds to the feedback provided to the OSC from stakeholders (including BLG’s feedback, available here), and outlines the specific ways in which the OSC plans to reduce unnecessary burden on capital markets participants operating in Ontario. Of the 107 decisions and recommendations outlined in the Report, close to 70 of them will directly affect investment funds and securities registrants. Certain projects have already been proposed and implementation of the applicable rule changes are well underway (see BLG’s Investment Management bulletins from October 2019 and July 2019 for further information).

SEC Proposes Amendments on Investment Companies' Use of Derivatives

December 2019 | Steven D. Lofchie - Cadwalader Wickersham & Taft LLP

The SEC reproposed a rule designed to "enhance" regulations on the use of derivatives by registered investment companies and business development companies ("BDCs"). According to the SEC, Proposed Rule 18f-4 under the Investment Company Act of 1940 would provide an exemption from Section 18 under the ICA for mutual funds, exchange-traded funds ("ETFs"), registered closed-end funds and BDCs (collectively, "funds") when entering into derivatives transactions.