Fund managers focusing on cryptocurrencies declined -19.31% in January – recording their deepest losses since November 2018, as tracked by the Eurekahedge Crypto-Currency Hedge Fund Index.
Bitcoin prices went down to $37,000 from its all-time high of $68,000 recorded in November 2021. In January, the leading cryptocurrency Bitcoin slipped -19.52%, while the second leading cryptocurrency as represented by Ethereum was down -29.81%.
Meanwhile, European and North American hedge funds recorded the largest year-on-year increase in their AUM among their regional peers. European hedge funds total AUM increased by US$44.5 billion to US$507.9 billion, while North American hedge funds total AUM increased by US$139.5 billion to US$1663.5 billion in 2021.
On an asset-weighted basis, hedge funds were down -0.75% in January, as captured by the Eurekahedge Asset Weighted Index – USD. The ability of larger hedge funds to allocate their AUM flexibly to manage volatility enabled them to outperform against their smaller peers during the month. Billion-dollar hedge funds as represented by the Eurekahedge Billion Dollar Hedge Fund Index were down -0.14% while medium hedge funds as represented by the Eurekahedge Medium Hedge Fund Index posted relatively larger losses of -0.96%.
The Eurekahedge North American Hedge Fund Index was down -2.02% in January, outperforming the three main US indexes with the NASDAQ, S&P 500 and DJIA posting -8.98%, -5.26% and -3.32% of losses during the month respectively. In terms of 2021 performance, North American hedge funds gained 14.02%, recording their second consecutive year of double-digit performance.
Pan-Asia hedge funds also suffered losses in January with the Eurekahedge Asia ex-Japan Hedge Fund Index and the Eurekahedge Japan Hedge Fund Index posting -3.39% and -2.46% of losses respectively. In terms of 2021 performance, the two Asian mandates posted 6.79% and 8.60% of return respectively as the slowing growth in China on top of the hawkish stance of the Federal Reserve contributed to the weakness of the broader equity market in the region.
The Eurekahedge CTA/Managed Futures Hedge Fund Index was up 0.87% in January, outperforming their strategic peers during the month. In terms of their asset flows, CTA/managed futures funds posted an AUM increase of US$26.5 billion in 2021, of which US$19.3 billion came from net flows. Investors are increasingly optimistic about investing in CTA/managed futures funds driven by higher energy prices.
The CBOE Eurekahedge Long Volatility Hedge Fund Index was up 2.04% in January, supported by the increase in volatility in the market, with the CBOE VIX reaching 24.83 at the end of January. Among their volatility index peers, only long volatility hedge funds generated a positive return as their short volatility, relative value and tail risk peers were down -0.03%, -0.91% and -1.76% respectively.