Hedge fund returns are on the up, Reuters reported on Tuesday, citing the latest data from Hedge Fund Research:
Hedge funds posted more gains last month, providing fresh evidence that the $1.4 trillion (840 billion pounds) industry is recovering after last year’s heavy losses and record redemptions.The average hedge fund gained 2.42 percent in July after having inched up 0.13 percent in June, data released on Friday by performance and flows tracking group Hedge Fund Research show.
On average the funds are up 12.17 percent for the year through July 31, the data show.
But as Reuters noted, the average gain of 2.42 per cent fell well short of the S&P 500’s 7.4 per cent gain in July.
The latest quarterly index from Hedgebay – a secondary hedge fund market provider – further supports the notion that the industry is far from re-scaling previous heights.
(Hedgebay works by bringing together buyers and sellers of stakes in hedge funds. These stakes may trade at either a discount or premium to their net assets values)
Hedgebay data for the second quarter were mixed. On the one hand, the average price for hedge fund assets rose for the first time in seven months during April, and continued in May, according to Hedgebay. Moreover, data for April to June showed the average discount on hedge fund assets has halved since reaching a low of 20 per cent in March, Hedgebay said.
But: all trades still occurred at a significant discount to NAV over the quarter.
Elias Tueta, co-founder of Hedgebay, put it thus:
On the whole, trading patterns indicate that investors do not believe the fundamentals of the market have changed. There are still a significant amount of illiquid assets on the secondary market that investors will not raise their bid levels for.
So while it may be true that the “industry is continuing to build itself back up from the low points,” as HFR COO Scott Esser put it, in relative terms hedgies still have a long way to go before anyone can say, “comeback.”
Related links:
It’s too early for private equity to be “back” – peHUB
Hedge fund investors plagued by a lack of conviction – FT Alphaville
Compelling case for going big on global macro – FT
Pressure to reduce ‘2 and 20′ hedge fund fees – FT