Hedge funds focused on the greater China region posted their first annual loss in five years, with the Eurekahedge Greater China Hedge Fund Index down 4.66% in 2016, after a gain of 10.24% the year before, according to hedge fund data tracker Eurekahedge.
Heaviest losses came late in the year, with the China hedge fund index falling 2.24% in December. The index last registered a loss of 13.19% in 2011. From 2012 to 2014, it gained 12.38%, 18.96% and 8.26%, respectively.
The Asia ex-Japan hedge fund index posted its fifth straight monthly loss in December, but was able to post a slight gain of 0.66% for the full year, after a 6.44% gain in 2015.
Hedge funds globally gained 4.48% for 2016, underperforming underlying markets as represented by the MSCI AC World Index, up 7.37% for the year.
However, a significant number of hedge funds were able to beat the market by a wide margin. Almost 19.7% of all hedge funds posted double digit returns in 2016, up from 17.6% in 2015.
Among different hedge fund strategies, distressed debt hedge funds posted the best 2016 returns, gaining 12.02%, followed by event driven and relative value hedge funds, which were up 9.70% and 6.64%, respectively, according to Eurekahedge.
Assets under management by hedge funds globally shrank for the first time since 2008. The hedge fund industry contracted by US$21.8 billion in 2016, with investor redemptions of US$43.4 billion, offsetting manager performance-driven gains of US$21.6 billion.
In 2015 the industry assets grew by US$108.7 billion, with US$80.7 billion of investor allocations driving the bulk of the industry growth.
Among developed mandates, North American and Japanese hedge funds gained 7.77% and 0.32%, respectively, in 2016, while European fund managers were down 0.12%.