PREQIN QUARTERLY UPDATE: FUNDS Q2 2017 Insight on the quarter from the leading provider of alternative assets data

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PREQIN QUARTERLY UPDATE: HEDGE FUNDS, Q2 2017

FOREWORD - Amy Bensted, Preqin

n an ongoing environment of performance scrutiny, hedge funds have continued to post positive returns over Q2 2017. The Preqin All- IStrategies benchmark was above water in April, May and June, adding 1.56% over the quarter, and taking the year-to-date return to +4.86%, the highest return in the first six months of a year since 2009. In fact, the Preqin All-Strategies Hedge Fund benchmark has had a string of positive returns, having been in the red in only one month out of the past 15.

CTAs continue to have a mixed 2017: the Preqin All-CTA Strategies benchmark has been in negative territory as many times as it has been in positive. A loss of 1.04% in June compounded performance challenges, and returns across all CTAs stand at -0.56% as at June 2017. However, there are some signs for optimism among managers in this space. Investor appetite for these strategies has bounced back from Q1 2017. Last quarter we noted that, using data taken from Preqin’s Hedge Fund Online, CTAs’ share of total fund searches issued by investors fell from 25% in Q4 2016 to 7% in Q1 2017. However, as our Q2 update reveals (see page 11), 15% of all searches issued by institutions in Q2 2017 included managed futures/CTAs.

Using data taken from Preqin’s Hedge Fund Online to assess fund launches by geographic focus, a trend for increased specialization within regions is emerging. In Q3 2016, funds with a global investment outlook represented 72% of all new launches; in Q2 2017 this has fallen to 56%. Across 2016 in general we noted an increase in the proportion of funds pursuing a global theme – perhaps in line with a year in which several macroeconomic geopolitical events drove the narrative. The reversal of this trend may reveal a change in the landscape of hedge funds, as managers look to pursue a more specialized geographic approach.

In this Q2 Quarterly Update, we look at the performance of the industry over the quarter, new funds launched, investor appetite and league tables of the largest fund managers and top performing funds in the hedge fund space. We hope you find this report useful and welcome any feedback you may have. For more information, please visit www.preqin.com or contact [email protected]. p4 H1 2017 Round-up: Winners and Losers p5 Performance Update p8 Top Performing Funds p11 Performance Benchmarks p12 Fund Launches p13 Largest Fund Managers p14 Fund Searches p16 Conferences

HEDGE FUND ONLINE

Hedge Fund Online is Preqin’s flagship hedge fund information resource, incorporating all of our hedge fund data, intelligence and functionality, providing you with the most comprehensive coverage of the asset class available.

Hedge Fund Online is updated on a daily basis by teams of skilled research analysts based around the globe, making it a vital source of data and information for fund managers, investors, service providers and other professionals seeking to keep up to date with the latest developments in the industry.

Get in touch today to arrange a demo of Hedge Fund Online: : [email protected] | : www.preqin.com/hedge

All rights reserved. The entire contents of Preqin Quarterly Update: Hedge Funds, Q2 2017 are the Copyright of Preqin Ltd. No part of this publication or any information contained in it may be copied, transmitted by any electronic means, or stored in any electronic or other data storage medium, or printed or published in any document, report or publication, without the express prior written approval of Preqin Ltd. The information presented in Preqin Quarterly Update: Hedge Funds, Q2 2017 is for information purposes only and does not constitute and should not be construed as a solicitation or other offer, or recommendation to acquire or dispose of any investment or to engage in any other transaction, or as advice of any nature whatsoever. If the reader seeks advice rather than information then he should seek an independent financial advisor and hereby agrees that he will not hold Preqin Ltd. responsible in law or equity for any decisions of whatever nature the reader makes or refrains from making following its use of Preqin Quarterly Update: Hedge Funds, Q2 2017. While reasonable efforts have been made to obtain information from sources that are believed to be accurate, and to confirm the accuracy of such information wherever possible, Preqin Ltd. does not make any representation or warranty that the information or opinions contained in Preqin Quarterly Update: Hedge Funds, Q2 2017 are accurate, reliable, up-to-date or complete. Although every reasonable effort has been made to ensure the accuracy of this publication Preqin Ltd. does not accept any responsibility for any errors or omissions within Preqin Quarterly Update: Hedge Funds, Q2 2017 or for any expense or other loss alleged to have arisen in any way with a reader’s use of this publication.

3 © Preqin Ltd. 2017 / www.preqin.com DOWNLOAD DATA PACK: www.preqin.com/quarterlyupdate H1 2017 ROUND-UP: WINNERS AND LOSERS GOING UP

EMERGING MARKETS Emerging markets, judged a winner in our Q1 2017 Quarterly Update, have continued their success in Q2 2017. Emerging markets- focused hedge funds generated positive returns for every month from January to June 2017, with a year-to-date return of +7.25%. In addition to existing products making strong gains in 2017 so far, fund managers also are seeing increased opportunity for new launches. Hedge funds that launched in Q2 2017 with a focus on emerging markets represented 7% of all fund launches in the quarter, compared with 6% in Q1 2017.

Emerging markets funds with a focus on Asia Horizon Capital Management’s Horizon have generated the highest returns (+18.98%) Growth Fund generated the highest returns of all emerging markets over the past 12 (+20.11%) of all emerging markets-focused months. funds in Q2 2017.

UCITS UCITS funds have had a successful start to the year in regards to performance: their year-to-date return (+3.60%) exceeds the benchmark’s full-year return for the whole of 2014, 2015 and 2016. Fund managers are also seeing greater opportunity in the UCITS arena – these funds represented a significantly larger proportion (11%) of fund launches in Q2 2017 than in Q1 2017 (5%).

The proportion of fund searches issued by UCITS funds employing equity strategies investors on Preqin’s Hedge Fund Online for generated the highest return (+10.31%) in the UCITS funds increased from 14% in Q1 2017 12 months to June 2017. to 15% in Q2 2017.

GOING DOWN

RELATIVE VALUE STRATEGIES There was a significant reduction in the proportion of fund searches issued by investors for relative value strategies. The strategy represented 5% of searches issued in Q2 2017, compared to 9% in Q1 2017. This is a significantly smaller proportion than in Q2 2016, when relative value strategies were sought by 13% of investors looking for new funds in the year ahead. This decreased appetite for the strategy could reflect wider performance concerns – relative value strategies have a year-to-date return of just +1.96%.

The relative value strategies benchmark has Relative value strategies accounted for 11% of the second lowest 12-month return (+5.53%) fund launches in Q2 2017, down from 13% in and the lowest annualized three-year return Q1 2017. (+4.56%) across top-level strategies.

MACRO STRATEGIES The Preqin All-Macro Strategies Hedge Fund benchmark has delivered the lowest year-to-date return (+0.79%) among all top-level strategies. In fact, the benchmark has made losses in each month since February 2017. Despite the difficult performance environment for hedge funds pursuing a macro strategy, investors remain interested in these funds.

The proportion of investors with open Macro strategies have the lowest 12-month mandates searching for macro strategies return (+3.62%) among all top-level increased from 16% in Q1 2017 to 18% in Q2 strategies. 2017.

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alternative assets. intelligent data. PREQIN QUARTERLY UPDATE: HEDGE FUNDS, Q2 2017 PERFORMANCE UPDATE

ollowing the strong start to 2017, hedge funds continued to -0.50% for the quarter, but still maintain a positive, albeit small, Fdeliver favourable performance in Q2 2017: the Preqin All- year-to-date return of 0.77%. Equity strategies and event driven Strategies Hedge Fund benchmark returned +1.56% for the second strategies were leaders of the pack for the quarter, making gains of quarter of the year (Fig. 1), rounding off its best H1 since 2009. The 2.12% and 1.80% respectively. improved performance of hedge funds in 2017 has contributed to the 12-month return of the benchmark reaching +10.90% (Fig. 2). Following their success at the start of the year, funds with a focus Furthermore, with a year-to-date return of +4.87%, hedge funds on Asia-Pacific made the largest gains in Q2 2017 (Fig. 4). Activist are on course to deliver the strongest end-of-year performance funds were a key driver of performance in the region, delivering since 2013. a return of +5.04% for the quarter and +9.89% year-to-date. Emerging markets-focused funds continue to outperform those Most leading hedge fund strategies posted positive returns in with a focus on developed markets. In Q2 2017, funds focused on the second quarter of the year, while CTAs and macro strategies emerging markets returned +1.71% compared to +0.78% for funds suffered losses over the period. Despite positive monthly returns in focused on developed markets. Emerging markets-focused funds April and May, a return of -1.04% in June led to CTAs losing 0.04% have delivered a significantly greater year-to-date return (+7.21%), for the quarter overall (Fig. 3). Macro strategies posted a return of than developed markets-focused funds (+2.87%).

Fig. 1: Performance of Hedge Funds in Q2 2017 by Structure* Fig. 2: Performance of Hedge Funds vs. S&P 500 PR Index*

2% 1.56% 18% 1.20% 16% 15.48% 1% 0.81% 0.64% 14% 0% 12.22% -0.04% 12% 10.90% -1% 10% 8.39% 7.76% 8% 7.33% -2% Net Return 6% 5.53% 4.97% 5.11%

Net Return 3.99% -3% 3.26% 3.25% 4% 3.31% 2.57% -4% 2% 1.71% 1.56% 0% -5% -5.09% -6% Q3 2016 Q3 2016 Q4 2017 Q1 2017 Q2 Hedge Fund of UCITS Alternative CTA Fund of 2-Year 3-Year 5-Year 12 Months Fund Hedge Hedge Mutual CTAs Annualized Annualized Annualized Funds Fund Fund Hedge Funds S&P 500 PR Index Source: Preqin Hedge Fund Online Source: Preqin Hedge Fund Online

Fig. 3: Net Returns of Single-Manager Hedge Funds by Strategy*

Apr-17 May-17 Jun-17 Q1 2017 Q2 2017 Event Driven Strategies CTAs Equity Strategies Equity Strategies Equity Strategies 1.01% 0.48% 0.91% 4.26% 2.12% Equity Strategies Credit Strategies Multi-Strategy Multi-Strategy Event Driven Strategies 0.97% 0.44% 0.51% 3.26% 1.80% Multi-Strategy Multi-Strategy Event Driven Strategies Event Driven Strategies Multi-Strategy 0.79% 0.40% 0.48% 3.22% 1.71% Credit Strategies Event Driven Strategies Credit Strategies Credit Strategies Credit Strategies 0.54% 0.30% 0.26% 2.59% 1.24% CTAs Equity Strategies Relative Value Strategies Relative Value Strategies Relative Value Strategies 0.53% 0.23% 0.23% 1.55% 0.30% Relative Value Strategies Macro Strategies Macro Strategies Macro Strategies CTAs 0.27% -0.06% -0.44% 1.28% -0.04% Macro Strategies Relative Value Strategies CTAs CTAs Macro Strategies 0.00% -0.20% -1.04% -0.53% -0.50%

Source: Preqin Hedge Fund Online

5 © Preqin Ltd. 2017 / www.preqin.com DOWNLOAD DATA PACK: www.preqin.com/quarterlyupdate

The top performing sub-strategies are largely within the equity The rolling returns of hedge funds relative to the S&P 500 Index and event driven top-level strategy groups (Fig. 5). Sector-focused have been converging since early 2015, although hedge funds lag funds have delivered a net return of +20.98% over 12 months the public index as at June 2017 (+10.90% vs. +15.48%), as shown to June 2017. Similarly, underlying strategies within the CTA in Fig. 6. Following a significant uptick in mid-2015, the correlation and macro strategies group make up the lower end of the sub- between hedge funds and the S&P 500 Index has been steadily strategies performance chart. Commodities are bottom of the decreasing since that time (Fig. 7). list and have the only negative return over 12 months to June 2017 (-3.30%). The wide dispersion (24.28%) in returns between the top and bottom performing sub-strategies demonstrates the importance of building a balanced portfolio.

Fig. 4: Cumulative Returns of Hedge Funds in Q2 2017 by Fig. 5: Performance of Hedge Fund Sub-Strategies, Geographic Focus* July 2016 - June 2017*

4% ector-ocused 20.8% ong ias 1.3% alue-riented 17.81% Activist 1.50% Event Driven 15.03% 3% pecialist redit 14.54% 2.87% pportunistic 14.44% Distressed 13.5% pecial ituations 13.75% 2.25% onghort Euity 11.81% 2% Mortgage-acked ecurities 10.57% iskMerger Aritrage .85% 1.71% onghort redit .53% ied ncome 8.38% Asset-acked ending 8.05% 1.12% elative alue Aritrage 7.1% Cumulative Net Return Cumulative 1% ied ncome Aritrage .4% 0.78% onvertile Aritrage .8% olatility .38% oreign Echange 4.% Macro 4.3% 0% Euity 4.21% tatistical Aritrage 2.28% Apr-17 May-17 Jun-17 ommodities -3.30% North America Europe Asia-Pacific -10% 0% 10% 20% 30% Developed Markets Emerging Markets Net Return Source: Preqin Hedge Fund Online Source: Preqin Hedge Fund Online

Fig. 6: Rolling Returns of Hedge Funds Relative to the S&P 500 Fig. 7: Rolling Correlation of Hedge Funds to the S&P 500 PR PR Index, 2010 - 2017* Index, 2010 - 2017 35% 1.0 30% 25% 20% 0.9 15% 15.48% 10% 10.90% 0.83 0.8 5% 0%

-5% Correlation Three-Year 0.7 12-Month Annualized Return 12-Month Annualized -10% -15% 0.6 Jul-10 Jul-15 Jan-13 Oct-11 Oct-16 Jun-13 Apr-14 Feb-15 Sep-14 Mar-12 Mar-17 Dec-10 Dec-15 Nov-13 Aug-12 May-11 May-16 Jul-12 Jan-15 Oct-13 Jun-10 Jun-15 Apr-11 Apr-16 Feb-12 Feb-17 Sep-11 Sep-16 Mar-14 Dec-12 Nov-10 Nov-15 Aug-14 Hedge Funds S&P 500 PR Index May-13 Source: Preqin Hedge Fund Online Source: Preqin Hedge Fund Online

*Please note, all performance information includes preliminary data for June 2017 based upon returns reported to Preqin in early July 2017. Although stated trends and comparisons are not expected to alter significantly, final benchmark values are subject to change.

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alternative assets. intelligent data.

DOWNLOAD DATA PACK: www.preqin.com/quarterlyupdate TOP PERFORMING FUNDS

Fig. 8: Net Returns of Top Performing Hedge Funds in the 12 Months to 30 June 2017 Fund Manager Headquarters Core Strategy 12-Month Return Silver 8 Partners Silver 8 Capital US Sector-Focused 269.06% Global Advisors Bitcoin Investment Fund Global Advisors Jersey Niche 149.09% Loyola Capital Partners Loyola Capital Management US Bias 127.14% Gramas Growth Partners Gramas Capital Management US Long/ Equity 121.47% Left Brain Capital Appreciation Fund Left Brain Capital Management US Long Bias 93.12% Source: Preqin Hedge Fund Online

Fig. 9: Net Returns of Top Performing Equity Strategies Hedge Funds in the 12 Months to 30 June 2017 Fund Manager Headquarters Core Strategy 12-Month Return Silver 8 Partners Silver 8 Capital US Sector-Focused 269.06% Loyola Capital Partners Loyola Capital Management US Long Bias 127.14% Gramas Growth Partners Gramas Capital Management US Long/Short Equity 121.47% Left Brain Capital Appreciation Fund Left Brain Capital Management US Long Bias 93.12% Kingsferry Classic Value Fund I - Class A Kingsferry Capital China Value-Oriented 88.18% Source: Preqin Hedge Fund Online

Fig. 10: Net Returns of Top Performing Macro Strategies Hedge Funds in the 12 Months to 30 June 2017 Fund Manager Headquarters Core Strategy 12-Month Return Halcyon Power Investment Company - Series 1A - 11 SPRING Russia Commodities 43.10% Cosmopolitan Global - Class I Clairinvest Switzerland Macro 32.58% SPX Raptor Feeder SPX Capital Brazil Macro 31.82% TCM Global Index Fund (Cayman) Limited - Growth Taaffeite Capital Management US Macro 30.63% Class Alpha Future Spread Fund Inmaxxa Netherlands Managed Futures/CTA 27.13% Source: Preqin Hedge Fund Online

Fig. 11: Net Returns of Top Performing Event Driven Strategies Hedge Funds in the 12 Months to 30 June 2017 Fund Manager Headquarters Core Strategy 12-Month Return Rosalind Offshore Fund - Master Series Rosalind Advisors Canada Event Driven 71.29% Rosalind Capital Partners - Class A Master Series Rosalind Advisors Canada Event Driven 69.26% SFP Japan Special Opportunities Fund Ltd Symphony Financial Partners Japan Event Driven 50.57% Marlin Fund Masters Capital Management US Opportunistic 43.80% Global Special Situations Fund - S Acc Net GBP Investec Asset Management UK Special Situations 41.60% Source: Preqin Hedge Fund Online Fig. 12: Net Returns of Top Performing Credit Strategies Hedge Funds in the 12 Months to 30 June 2017 Fund Manager Headquarters Core Strategy 12-Month Return Prytania Athena Fund Prytania Investment Advisors UK Specialist Credit 30.39% Vector Capital Credit Opportunity Fund - Series A Vector Capital Management US Specialist Credit 26.31% shares Mortgage-Backed CCP Total Return Fund Cicero Capital Partners US 26.21% Strategies Serone Key Opportunities Fund - B EUR Serone Capital Management UK Specialist Credit 24.24% Picton Mahoney Income Opportunities Fund - Class Picton Mahoney Asset Canada Fixed Income 23.82% F Management Source: Preqin Hedge Fund Online

Fig. 13: Net Returns of Top Performing Relative Value Strategies Hedge Funds in the 12 Months to 30 June 2017 Fund Manager Headquarters Core Strategy 12-Month Return RYJ Fund RYJ Capital Management US Statistical Arbitrage 35.90% Aleph One Isotropic Fund Aleph One Fund Management Ltd Cayman Islands Statistical Arbitrage 33.85% Apex Market Neutral Greater China Enhanced Fund Apex Capital Management US Equity Market Neutral 28.46% Gondor Partners, LP Gondor Capital Management US Equity Market Neutral 28.19% Malta Market Neutral Fund Maltese Capital Management US Equity Market Neutral 26.40% Source: Preqin Hedge Fund Online

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alternative assets. intelligent data. PREQIN QUARTERLY UPDATE: HEDGE FUNDS, Q2 2017

Fig. 14: Net Returns of Top Performing Multi-Strategy Hedge Funds in the 12 Months to 30 June 2017 Fund Manager Headquarters Core Strategy 12-Month Return Quam China Focus Fund - Class D Quam Asset Management Hong Kong Multi-Strategy 34.53% Polo Norte FIM Polo Capital Management Brazil Multi-Strategy 32.74% Kapitalo Zeta FIQ FIM Kapitalo Investimentos Brazil Multi-Strategy 28.71% Whitebox Relative Value Fund, LP Whitebox Advisors LLC US Multi-Strategy 27.96% Leste Global Fund Leste Global Investments Brazil Multi-Strategy 27.74% Source: Preqin Hedge Fund Online

Fig. 15: Net Returns of Top Performing CTAs in the 12 Months to 30 June 2017 Fund Manager Headquarters Core Strategy 12-Month Return Dutch Darlings Fund Inmaxxa Netherlands Managed Futures/CTA 63.52% Volpoint Fund, LP Volpoint Capital US Managed Futures/CTA 63.30% Triple M Program Global Wealth Analytics US Managed Futures/CTA 49.29% Von Preussen-Hohenberg X-Type Level 4 Switzerland Managed Futures/CTA 43.38% Management Navajo White Indian Trading Company US Managed Futures/CTA 36.46% Source: Preqin Hedge Fund Online

Fig. 16: Net Returns of Top Performing North America-Based Hedge Funds in the 12 Months to 30 June 2017 Fund Manager Headquarters Core Strategy 12-Month Return Silver 8 Partners Silver 8 Capital US Sector-Focused 269.06% Loyola Capital Partners Loyola Capital Management US Long Bias 127.14% Gramas Growth Partners Gramas Capital Management US Long/Short Equity 121.47% Left Brain Capital Appreciation Fund Left Brain Capital Management US Long Bias 93.12% Rosalind Offshore Fund - Master Series Rosalind Advisors Canada Event Driven 71.29% Source: Preqin Hedge Fund Online

Fig. 17: Net Returns of Top Performing Europe-Based Hedge Funds in the 12 Months to 30 June 2017 Fund Manager Headquarters Core Strategy 12-Month Return Global Advisors Bitcoin Investment Fund Global Advisors Jersey Niche 149.09% Halcyon Power Investment Company - Series 1A - 11 SPRING Russia Commodities 43.10% Global Special Situations Fund - S Acc Net GBP Investec Asset Management UK Special Situations 41.60% Northglen Aggressive SP Slater Investments UK Long Bias 40.80% Tosca - Series A USD Toscafund UK Long/Short Equity 39.33% Source: Preqin Hedge Fund Online

Fig. 18: Net Returns of Top Performing Asia-Pacific-Based Hedge Funds in the 12 Months to 30 June 2017 Fund Manager Headquarters Core Strategy 12-Month Return Kingsferry Classic Value Fund I - Class A Kingsferry Capital China Value-Oriented 88.18% SFP Japan Special Opportunities Fund Ltd Symphony Financial Partners Japan Event Driven 50.57% Long/Short Equity, Redart Focus Fund Redart Capital India 46.23% Value-Oriented Event Driven, Long/ UG Hidden Dragon Special Opportunity Fund - Class UG Investment Advisers Taiwan Short Equity, Value- 42.07% A Oriented Japan-Up Unit Trust Strategic Capital Japan Event Driven 39.04% Source: Preqin Hedge Fund Online

Fig. 19: Net Returns of Top Performing Rest of World-Based Hedge Funds in the 12 Months to 30 June 2017 Fund Manager Headquarters Core Strategy 12-Month Return Horizon Growth Fund Horizon Capital Management Uruguay Long Bias 32.90% Polo Norte FIM Polo Capital Management Brazil Multi-Strategy 32.74% SPX Raptor Feeder SPX Capital Brazil Macro 31.82% Bresser AÇÕES FIA Bresser Asset Management Brazil Long/Short Equity 30.96% FCL Equities FCL Capital Brazil Long Bias 29.47% Source: Preqin Hedge Fund Online

9 © Preqin Ltd. 2017 / www.preqin.com EMERGING MANAGERS SUMMIT

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Fig. 20: Summary of Q2 2017 Performance Benchmarks (Net Return, %)* 3-Year Benchmark Name Apr-17 May-17 Jun-17 Q2 2017 12 Months Annualized Hedge Fund 0.77 0.21 0.57 1.56 10.90 5.11 HF - Equity Strategies 0.97 0.23 0.91 2.12 13.62 5.23 HF - Event Driven Strategies 1.01 0.30 0.48 1.80 14.11 4.66 HF - Relative Value Strategies 0.27 -0.20 0.23 0.30 5.53 4.56 HF - Macro Strategies 0.00 -0.06 -0.44 -0.50 3.62 4.86 HF - Multi-Strategy 0.79 0.40 0.51 1.71 9.58 5.47 HF - Credit Strategies 0.54 0.44 0.26 1.24 9.60 5.03 Activist 1.08 0.54 0.73 2.37 16.50 6.59 Volatility 0.63 0.48 0.23 1.35 6.38 5.56 Discretionary 0.94 0.29 0.95 2.19 13.28 5.55 Systematic 0.72 0.13 -0.22 0.63 6.20 5.50 HF - North America 0.63 -0.10 0.59 1.12 12.41 5.01 HF - Europe 1.22 0.82 0.20 2.25 11.29 4.87 HF - Asia-Pacific 0.53 0.79 1.53 2.87 12.02 6.99 HF - Developed Markets 0.47 0.25 0.06 0.78 9.20 5.66 HF - Emerging Markets 1.24 0.12 0.34 1.71 12.84 6.39 HF - USD 0.75 0.25 0.84 1.86 11.52 4.58 HF - EUR 0.57 0.19 0.06 0.83 6.84 2.03 HF - GBP 0.56 0.52 0.71 1.80 7.06 2.42 HF - JPY -0.29 1.47 0.41 1.59 12.48 6.02 HF - BRL 0.52 -0.79 1.26 0.99 16.71 12.73 HF - Emerging (Less than $100mn) 0.65 -0.09 0.42 0.97 10.51 4.66 HF - Small ($100-499mn) 0.83 0.25 0.65 1.74 11.60 5.23 HF - Medium ($500-999mn) 0.92 0.76 1.02 2.72 12.67 4.96 HF - Large ($1bn or More) 0.89 0.86 -0.13 1.62 9.89 4.45 Fund of Hedge Funds 0.55 0.20 0.06 0.81 5.05 1.57 FOHF - Equity Strategies 0.94 0.59 0.38 1.92 8.79 2.65 FOHF - Multi-Strategy 0.49 0.16 0.00 0.64 5.34 1.59 Funds of CTAs -0.19 -0.33 -4.59 -5.09 -10.29 0.44 FOHF - USD 0.54 0.34 0.16 1.05 6.34 1.43 FOHF - EUR 0.43 0.02 -0.25 0.19 1.46 -0.28 Alternative Mutual Fund 0.42 -0.02 0.24 0.64 4.12 1.05 UCITS 0.66 0.49 0.05 1.20 6.42 2.14 UCITS - Equity Strategies 1.05 0.81 0.27 2.15 10.31 3.19 UCITS - Relative Value Strategies 0.19 0.15 0.15 0.49 1.87 0.99 UCITS - Macro Strategies 0.14 0.20 -0.22 0.12 3.95 1.34 UCITS - USD 0.90 0.86 0.46 2.24 8.25 1.67 UCITS - EUR 0.54 0.25 -0.12 0.67 5.16 2.02 CTA 0.53 0.48 -1.04 -0.04 -2.64 3.21 Discretionary 1.38 -0.29 1.36 2.46 3.11 1.84 Systematic 0.33 0.86 -1.57 -0.39 -4.11 3.04 CTA - USD 0.45 0.44 -1.10 -0.22 -3.06 3.08 CTA - EUR 0.75 0.83 -2.61 -1.08 -2.70 2.65

Source: Preqin Hedge Fund Online *Please note, all performance information includes preliminary data for June 2017 based upon returns reported to Preqin in early July 2017. Although stated trends and comparisons are not expected to alter significantly, final benchmark values are subject to change.

11 © Preqin Ltd. 2017 / www.preqin.com DOWNLOAD DATA PACK: www.preqin.com/quarterlyupdate FUND LAUNCHES

reqin’s Hedge Fund Online features details on 100 hedge 2% of funds launched in Q1 2017 have an Asia-Pacific focus, 5% of Pfunds that were launched in Q2 2017. Single-manager hedge funds launched in Q2 2017 are targeting investment in the region. funds accounted for 74% of launches, a 10 percentage point More emerging markets-focused funds were also launched this decrease from 84% in Q1 2017 (Fig. 21). This was, however, offset quarter, with their share increasing from 6% of fund launches in by an increase in UCITS launches: UCITS-compliant hedge funds Q1 to 7% in Q2 2017. made up 11% of new launches in Q2, an increase from 5% of launches in the previous quarter. Despite a relatively weak 2017 YTD return of -0.56%, the proportion of fund launches pursuing managed futures/ North America-based hedge funds represented the majority (71%) CTAs significantly increased during the quarter, with 15% of of new launches in Q2 2017, while Europe’s share of launches newly launched vehicles employing the strategy (Fig. 24). This increased from 16% in Q1 2017 to 22% in Q2 (Fig. 22). This can be corresponds with a significant increase in investor searches for partly attributed to the increase in UCITS launches, a fund type managed futures/CTAs on Preqin’s Hedge Fund Online database primarily utilized by Europe-based fund managers. The proportion (see page 11). With volatile macroeconomic events occurring of total fund launches that were based in Asia-Pacific also across the US and EU, CTAs could be increasingly favoured by increased, rising to 7% from 3% in Q1 2017. investors looking to build a portfolio with downside protection and the ability to generate alpha in an uncertain economic As in previous quarters, the majority (56%) of newly launched climate. funds in Q2 focused their investments globally (Fig. 23). While just

Fig. 21: Hedge Fund Launches in Q2 2017 by Structure Fig. 22: Hedge Fund Launches in Q2 2017 by Manager Location

2% 1% Hedge Fund 7% 12%

UCITS North America 22% 11% CTAs Europe

Fund of Hedge Asia-Pacific Funds Rest of World Alternative Mutual 71% 74% Fund

Source: Preqin Hedge Fund Online Source: Preqin Hedge Fund Online

Fig. 23: Hedge Fund Launches by Geographic Focus, Fig. 24: Hedge Fund Launches by Core Strategy, Q3 2016 - Q2 2017 Q3 2016 - Q2 2017 100% 100% 1% 1% 1% 1% 7% Niche Strategies 10% 8% 11% 9% 90% 90% 7% 10% 8% Multi-Strategy 80% 80% 6% 11% 15% Global 7% 8% 56% 70% 70% 14% 13% 13% 11% Managed 62% 8% 72% 69% Emerging Markets Futures/CTA 60% 60% 11% 12% 10% 14% 12% Relative Value 50% Asia-Pacific 50% 8% Strategies 14% 10% 9% 13% Credit Strategies 40% 7% 40% 10% 10% 6% 5% Europe 30% 2% 30% Event Driven 7% 5% 8% 6% Strategies Proportion of Fund Launches of Fund Proportion North America Launches of Fund Proportion 20% 6% 9% 20% 39% 42% 36% 35% 33% Macro Strategies 5% 4% 26% 10% 24% 10% 12% 11% Equity Strategies 0% 0% Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Source: Preqin Hedge Fund Online Source: Preqin Hedge Fund Online

12

alternative assets. intelligent data. PREQIN QUARTERLY UPDATE: HEDGE FUNDS, Q2 2017 LARGEST FUND MANAGERS

Fig. 25: Largest Hedge Fund Managers by Manager Location Year Established Assets under Management US 1975 $165.8bn as at 31 March 2017 AQR Capital Management US 1998 $96.0bn as at 31 December 2016 UK 1983 $57.2bn as at 31 March 2017 US 1982 $44.9bn as at 31 March 2017 Millennium Management US 1989 $34.8bn as at 31 March 2017 Standard Life Investments UK 1998 $33.1bn as at 31 March 2017 Och-Ziff Capital Management US 1994 $31.9bn as at 1 April 2017 Winton Capital Management UK 1997 $31.7bn as at 31 March 2017 Elliott Management US 1977 $31.4bn as at 31 December 2016 Investments US 2002 $30.4bn as at 1 January 2017 US 1982 $30.0bn as at 31 January 2017 Adage Capital Management US 2001 $27.7bn as at 31 December 2016 Davidson Kempner Capital Management US 1990 $27.1bn as at 31 March 2017 Citadel Advisors US 1990 $27.0bn as at 31 March 2017 BlackRock Alternative Investors US 2005 $26.8bn as at 31 March 2017 UK 1997 $26.6bn as at 3 April 2017 D.E. Shaw & Co. US 1988 $26.0bn as at 1 January 2017 Management US 1986 $22.8bn as at 31 January 2017 US 1999 $19.9bn as at 31 March 2017 GAM UK 1983 $19.8bn as at 31 December 2016

Source: Preqin Hedge Fund Online

Fig. 26: Largest Fund of Hedge Funds Managers by Assets under Management Manager Location Year Established Assets under Management Blackstone Alternative Asset Management US 1990 $73.0bn as at 31 March 2017 UBS Hedge Fund Solutions US 2000 $33.6bn as at 31 March 2017 Goldman Sachs Asset Management US 1997 $27.4bn as at 31 March 2017 HSBC Alternative Investments UK 1994 $26.1bn as at 31 December 2016 Grosvenor Capital Management US 1971 $25.9bn as at 31 December 2016 EnTrustPermal US 1971 $24.4bn as at 31 March 2017 BlackRock Alternative Advisors US 1995 $22.4bn as at 31 March 2017 Partners US 2000 $23.0bn as at 31 March 2017 Man FRM UK 1991 $14.5bn as at 31 March 2017 J.P. Morgan Alternative Asset Management US 1995 $13.1bn as at 31 March 2017 Rock Creek Group US 2002 $11.6bn as at 31 March 2017 SkyBridge Capital US 2005 $10.9bn as at 31 March 2017 Aetos Capital US 1998 $10.7bn as at 31 March 2017 LGT Capital Partners Switzerland 1994 $10.6bn as at 31 March 2017 Credit Suisse Alternative Funds Solutions UK 1998 $10.5bn as at 30 June 2016 Aberdeen Asset Management US 2001 $10.2bn as at 31 March 2017 Mesirow Advanced Strategies US 1983 $10.0bn as at 31 March 2017 PAAMCO US 2000 $10.0bn as at 31 March 2017 KKR Prisma US 2004 $9.7bn as at 31 March 2017 Pictet Alternative Advisors SA Switzerland 1991 $9.6bn as at 31 March 2017 K2 Advisors US 1994 $9.0bn as at 31 March 2017

Source: Preqin Hedge Fund Online

13 © Preqin Ltd. 2017 / www.preqin.com DOWNLOAD DATA PACK: www.preqin.com/quarterlyupdate FUND SEARCHES

uring Q2 2017, Preqin added 152 new investor fund searches searches in Q2, compared with 7% in Q1. Additionally, having Dto the Fund Searches and Mandates feature on Hedge Fund finished Q1 as one of the poorer performing strategies, demand Online. The largest proportion (49%) of investors issuing fund for relative value arbitrage strategies weakened: the strategy searches were based in North America, followed by Europe (32%, represented just 5% of searches in Q2, down from 9% in Q1. Fig. 27). Asia-Pacific-based investors have accounted for a greater proportion (14%) of searches in Q2 2017, up from 9% of searches The majority (88%) of searches issued by institutional investors in Q1 2017. in Q2 2017 were for commingled direct hedge fund vehicles, while the proportion of searches issued for managed accounts Long/short equity remains the most sought-after strategy, as has increased substantially from 6% of searches in Q1 to 13% in targeted by almost a third (32%) of active investors, representing a Q2 (Fig. 29). As demonstrated by Fig. 30, fund of hedge funds small decrease from 33% in Q1 (Fig. 28). managers made up the largest proportion (47%) of investors initiating searches during Q2. Private wealth institutions Despite the 12-month return of CTAs falling behind most other continued to feature heavily, with family offices and wealth leading benchmarks, there has been a rebound in searches for managers together representing 21% of fund searches. Pension these strategies since Q1 2017. CTAs accounted for 15% of fund funds represented 13% of investors issuing searches.

Fig. 27: Hedge Fund Searches Issued in Q2 2017 by Investor Fig. 28: Hedge Fund Strategies Sought by Investors over the Location Next 12 Months, Searches Issued in Q1 2017 vs. Q2 2017

35% 33%32% 30% 5%

14% 25% North America Q1 2017 20% 18% 16% 14% 15% Q2 2017 Europe 15% 13% 12% 11% 10% 49% 10% 10% 9% 9% Asia-Pacific 8% 7% 7% 7% 5% 6% 5%

Proportion of Fund Searches of Fund Proportion 5% Rest of World 32% 0% Macro Credit Equity Distressed Neutral Managed Long/Short Long/Short Arbitrage Futures/CTA Event Driven Fixed Income Equity Market Relative Value Multi-Strategy Source: Preqin Hedge Fund Online Source: Preqin Hedge Fund Online

Fig. 29: Hedge Fund Structures Sought by Investors over the Fig. 30: Hedge Fund Searches Issued in Q2 2017 by Investor Next 12 Months, Searches Issued in Q2 2017 Type 100% 90% 88% Fund of Hedge Funds Manager 80% 9% 70% 3% 60% 6% Asset Manager 50% 40% 7% Public 30% 47% 20% 15% 13% Wealth Manager

Proportion of Fund Searches of Fund Proportion 7% 10% 4% 3% 2% 0% Private Sector Pension 7% Fund

UCITS Investment Company 14% - Direct Alternative Listed Funds MutualFund Managed Managed Commingled

Separately Other Account - Direct - Account Direct - Account Source: Preqin Hedge Fund Online Source: Preqin Hedge Fund Online

14

alternative assets. intelligent data. The Private Investment Fund landscape is about to undergo some of the BIGGEST changes since Dodd-Frank, it’s time to strategize!

Private Investment Fund Operations & Compliance Forum July 25-26, 2017 The Marines Memorial Club, San Francisco

REGISTER NOW Save 15% w/code FMP187

TO REGISTER: CALL 800-280-8440 OR VISIT US AT HTTPS://EVENTS.FRALLC.COM/B1060?DVCE=1 DOWNLOAD DATA PACK: www.preqin.com/quarterlyupdate CONFERENCES

JULY 2017

Conference Dates Location Organizer Preqin Speaker Discount Code Family Office & Private Wealth Management Forum Opal Financial 24 - 26 July 2017 Newport, RI - - 2017 Group

SEPTEMBER 2017

Conference Dates Location Organizer Preqin Speaker Discount Code Total Alts 2017 7 - 8 September 2017 San Francisco, CA IMN - - AIMA Australia Annual Forum 2017 12 September 2017 Sydney AIMA - - CTA Expo Chicago 14 September 2017 Chicago, IL CTA Expo Amy Bensted - Women's Investment Management Opal Financial 14 September 2017 New York - - Leadership Summit Group Opal Financial Emerging Managers Summit 14 - 15 September 2017 New York - - Group Cap Intro: L/S Equity | Event Driven Alternative Catalyst Financial 18 September 2017 New York - - Investing Partners Ai CEO Institutional Investment Summit 2017 18 September 2017 New York Africa Investor - - DM Alternatives Conference 21 - 22 September 2017 Seoul DarcMatter - - Mark O'Hare 10% Discount – SuperReturn Asia 25 - 28 September 2017 Hong Kong KNect365 Felice Egidio FKR2433PRQW AIMA Canada Investor Forum 2017 25 September 2017 Montréal AIMA - - 10 Discount - UCITS & AIDMD London 26 - 27 September 2017 London KNect365 - FKW53537PQC Amy Bensted Channel Islands Funds Forum 2017 27 September 2017 Jersey BL Global - Tom Carr

OCTOBER 2017

Conference Dates Location Organizer Preqin Speaker Discount Code marcus evans Australian Investors Summit 2017 5 - 6 October 2017 Sydney - - Summits marcus evans Latin Private Wealth Management Summit 9 - 10 October 2017 Cancún - - Summits FundForum Middle East & Africa 9 - 11 October 2017 Dubai KNect365 - - EURUS 2017 12 October 2017 Zürich EURUS Forum - Cap Intro: Credit | Fixed Income Alternative Catalyst Financial 16 October 2017 New York - - Investing Partners marcus evans Global Investors Summit 2017 16 - 18 October 2017 Montreux - - Summits C4K Investors Conference 18 - 19 October 2017 Toronto Capitalize for Kids - - Opal Financial Family Office & Private Wealth Forum – West 25 - 27 October 2017 Napa, CA - - Group Managed Futures & Strategies: Risk 25 - 26 October 2017 Austin, TX Talking Hedge - - Mitigation for Institutional Portfolios 30 October - marcus evans Private Wealth Management Summit APAC 2017 Macao - - 1 November 2017 Summits

16

alternative assets. intelligent data. PREQIN QUARTERLY UPDATE: HEDGE FUNDS, Q2 2017

OPERATIONS & COMPLIANCE FOR ALTERNATIVE INVESTMENT FUNDS

DATE: 25 - 26 July 2017 INFORMATION: http://events.frallc.com/events/the-private-investment-fund-operations-and-compliance-forum-b1060-/ event-summary-c1dd555e5e194c5f80723df69131ea47.aspx LOCATION: Marines Memorial Club, San Francisco, CA ORGANIZER: Financial Research Associates, LLC Optimizing the productivity and efficiency for private equity, venture capital, hedge fund and other less-liquid Investments. As change is on the horizon, join our assembly of industry leaders and cutting-edge thinkers for opportune and relevant discussion covering the major developments that affect private investment funds.

CTA EXPO CHICAGO

DATE: 14 September 2017 INFORMATION: www.CTAExpo.com LOCATION: The Conference Center, One North Wacker Dr, Chicago, IL ORGANIZER: CTAExpo LLC CTA Expo Chicago is a unique forum for money raisers and asset allocators to meet and discover Commodity Trading Advisors and promote managed futures investing. From dedicated presentations to opportunities for networking, CTA Expo provides a forum for allocators and CTAs to do business.

EMERGING MANAGERS SUMMIT

DATE: 14 - 15 September 2017 INFORMATION: www.opalgroup.net/trk/emsc1702.html LOCATION: Crowne Plaza Hotel, Times Square, New York ORGANIZER: Opal Group The program will highlight the benefits and opportunities for institutional and private wealth investors to invest in new, diverse, emerging managers and boutique fund managers. Attendees will be able to hear from the nation’s leaders in the new and ev- er-changing emerging manager market.

UCITS & AIFMD LONDON 2017

DATE: 26 - 27 September 2017 INFORMATION: https://goo.gl/XyoRYP LOCATION: London, UK ORGANIZER: KNect365 UCITS & AIFMD London 2017 conference is a unique opportunity to engage with key regulatory challenges and developing distribution opportunities. Discover the impact of Brexit on cross-border distribution, evolving investor demand and disclosure requirements, the future of outsourcing and third party ManCos, upcoming regulatory challenges for European managers, and much more. Hear from asset managers and national financial regulators - learn more about developing asset-raising opportuni- ties and grow your industry network. Discount code: FKW53546PQL.

17 © Preqin Ltd. 2017 / www.preqin.com DOWNLOAD DATA PACK: www.preqin.com/quarterlyupdate

FUNDFORUM MIDDLE EAST & AFRICA

DATE: 9 - 11 October 2017 INFORMATION: https://goo.gl/MVTgSi LOCATION: Ritz Carlton DIFC, Dubai ORGANIZER: KNect365 FundForum Middle East and FundForum Africa are joining forces to form a brand new event, putting emerging and frontier markets firmly in the spotlight. Join us in Dubai to: • Gain a comprehensive overview of the current investment landscape in Africa, the Middle East and other key emerging markets • Hear from a fantastic line-up of CEOs, CIOs and business leaders from domestic and boutique asset management companies alongside leading global players • Discuss investor appetite and discover solutions to the issues impacting wealth management in the Middle East • Join a community of 300+ family offices, wealth management platforms, institutional investors and portfolio managers from across the globe • Meet those elusive new clients and catch up with old friends

CATALYST CAP INTRO: CREDIT | FIXED INCOME ALTERNATIVE INVESTING

DATE: 16 October 2017 INFORMATION: http://catalystforum.com/events/credit-fixed-income-alternative-investing-4/ LOCATION: New York ORGANIZER: Catalyst Financial Partners Catalyst Cap Intro events are investor driven and transactional events that host alpha-oriented investment managers and institutional grade investors that are introduced to each other with a view to become investment partners.

This Catalyst Cap Intro Event focuses only on the Credit | Fixed Income Alternative Investing space. Strategies include, among others: relative value, structured credit, sovereign debt, trade finance, peer-to-peer lending, RMBS/CMBS, consumer loans, corporate lending, bridge financing, , and mezzanine debt.

HEDGE FUND INVESTOR LEADERSHIP SUMMIT

DATE: 2 - 3 November 2017 INFORMATION: www.apgainingtheedge.com LOCATION: New York ORGANIZER: Agecroft Partners Gaining the Edge 2017 will feature 600 hedge fund investment professionals, including 300 of the world’s most influential inves- tors in hedge funds, to have candid, robust comments and debates about various ways to enhance the risk adjusted returns of a diversified hedge fund portfolio. Visit www.apgainingtheedge.com for more information.

18

alternative assets. intelligent data. HEDGE FUND ONLINE

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alternative assets. intelligent data.