Indian hedge funds outperformed many of their global peers during the January-March quarter of 2014, rising 5.4 per cent. According to the latest data from independent financial data and research firm Eurekahedge, hedge funds focused on India enjoyed a broad-based rally in the first quarter as markets responded positively to Government measures to stave off possible contractions in the economy.
The India-focused funds posted a negative 2.4 per cent return for January, but recovered in the next two months, rising 2.3 per cent in February, and 5.7 per cent in March.
Performance across Indian hedge funds was mixed. The 10 India-focused hedge funds with a long-short equity strategy tracked by Eurekahedge registered maximum success during the period, gaining 6.5 per cent during the three-month period, higher than the 5.9 per cent increase registered by the Sensex. In contrast, the three funds with a fixed income agenda could only manage a 0.7 per cent return.
In comparison, global hedge funds rose 0.9 per cent amid a choppy start to the year in most markets. Nevertheless, they outperformed the MSCI World Index — a barometer charting the performance of global indices — which only gained 0.7 per cent during the same period.
Final asset flow figures for February revealed that managers realised performance-based gains of $26.8 billion while recording net asset inflows of $31.4 billion as hedge funds continued to attract strong capital allocations from investors. Preliminary data for March, on the other hand, revealed that managers registered net asset inflows of $8.1 billion, taking the current assets under management of the global industry to nearly $2.1 trillion, the highest level on record.
Fund managers deploying long/short equity strategies saw the largest net asset inflows of $6.7 billion, followed by multi-strategy ($1.6 billion) and event-driven ($1 billion) while macro and commodity trading advisor (CTA)/managed futures strategies recorded net outflows for the month.