Introduction
Hedge funds posted an average return of -0.87%1 in November, outperforming global equity markets by 2.35% as managers focused on capital preservation strategies. The MSCI World Index fell by as much as 10% during the course of the month, before a month-end rally. At the same time, risk aversion remained high with the Euro zone debt issues continuing to weigh in on investor sentiment. Managers lost US$9.92 billion of assets mainly through investment outflows while performance was also in negative territory. November marks the fourth consecutive month of negative net flows this year. Total hedge fund assets under management have retraced to the US$1.73 trillion mark, the same level as it was in January of this year.
Highlights of hedge fund performance and asset flows for the month are as follows:
| November 2011 | US$ billion |
|---|---|
| Allocation (Inflows) | 11.98 |
| Redemption (Outflows) | -21.41 |
| Net Asset Flows | -9.43 |
| Positive Performance (Growth) | 2.45 |
| Negative Performance (Decline) | -2.94 |
| Total | -0.49 |
| Overall Total | -9.92 |
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