Hedge Fund Focus

Funds return an average of +4.3% in April, but redemptions cause industry assets to rise only slightly

NEW YORK–(BUSINESS WIRE)–HedgeFund.net (HFN) releases April hedge fund asset flow and performance estimates. After turning positive for the year in March, aggregate hedge fund performance jumped in April to the highest level in more than 9 years. With 1,633 fund products reporting April performance, the HFN Hedge Fund Aggregate Average shows +4.3% for the month and +4.5% for 2009 compared to -2.5% for the S&P 500 Total Return Index.

April 2009 Asset Flow Highlights:

- Estimated hedge fund assets increased slightly in April, +0.29% to $1.697 trillion. Performance gains added $40.0 billion and net investor redemptions/liquidations accounted for an outflow of $35.1 billion.

- The outflow of $35.1 billion compares with an outflow of $51.7 billion in March, $37.5 billion in February and $166.4 billion in January. As a percentage of prior month assets, April outflows represented a 2.1% reduction; an improvement from March and January, but slightly worse than February.

- The overall increase in total fund assets of $5.0 billion was the first monthly rise in assets since Q2 2008.

- Since redemptions/liquidations began to outpace allocations/launches in Q3 2008, there have been net investor outflows of $815.3 billion from the hedge fund industry. During that time, performance reduced assets an additional $425.0 billion. Industry assets have fallen an estimated 42.2% from the peak in Q2 2008 and 12.2% in 2009.

- The rate of redemptions from fixed income strategies outpaced equity strategies for the second month in a row. Redemptions from equity strategies have slowed for the fourth straight month while redemptions from fixed income strategies have increased for three straight months.

Asset flow information across manager location, regional investment exposure and primary investment strategy is available upon request.

Summary 2009 estimated hedge fund industry asset flows:
Date           Total Assets

Total Flows

Monthly %
Change

Change Due to
Performance

Net flows from
Redemptions/Allocations and
Launches/Liquidations
01/2009         $1,786.40         ($146.00)         -7.56%         $20.37         ($166.37)
02/2009         $1,741.64         ($44.76)         -2.51%         ($7.22)         ($37.54)
03/2009         $1,692.32         ($49.32)         -2.83%         $2.40         ($51.72)
04/2009         $1,697.28         $4.97         0.29%         $40.02         ($35.05)

All figures in $ billion for single manager hedge fund assets only.

April Performance Highlights:

April performance was again primarily driven by surging global equity markets, but was not hindered by major mid-month commodity and rate market reversals as occurred in March. Mixed commodity prices did appear to impact CTA/Managed Futures products which, along with short biased funds, are the only fund types reporting negative average performance for the month.

Smaller funds appeared to have taken greater advantage of April’s positive environment compared to larger funds. A large sample of funds reporting performance and assets showed asset weighted performance was closer to +2.4%.

Positive primary strategy performance for April includes:
Benchmark           April           YTD 2009
HFN Energy Sector Average         10.13%         15.69%
HFN Event Driven Average         9.61%         11.70%
HFN Emerging Markets Average         9.60%         9.61%
HFN Small/Micro Cap Average         8.78%         6.74%
HFN Convertible Arbitrage Average         6.67%         16.97%
HFN Technology Sector Average         5.93%         9.12%
HFN Long/Short Equity Average         5.87%         5.90%
HFN Statistical Arbitrage Average         5.26%         9.05%
HFN Distressed Average         3.96%         2.37%

Negative primary strategy performance for April includes:
Benchmark           April           YTD 2009
HFN Short Bias Average         -7.72%         -5.62%
HFN CTA/Managed Futures Average         -0.21%         -2.85%

Regional/country specific performance for April includes:
Benchmark           April           YTD 2009
HFN Middle East/North Africa Average         12.72%         6.86%
HFN India Average         12.68%         7.01%
HFN Brazil Average         11.19%         13.84%
HFN Latin America Average         10.41%         12.18%
HFN North America Average         7.52%         9.82%
HFN Russia Average         6.81%         7.30%
HFN Asia Average         5.72%         4.71%
HFN China Average         5.59%         9.35%
HFN Australia Average         4.95%         7.70%

PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS

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