Hedge funds investing in emerging Asia posted gains in March and April, with the HFRI Emerging Markets Asia ex-Japan Index gaining over 8.5 per cent year-to-date, inclusive of a seven p
Hedge funds investing in emerging Asia posted gains in March and April, with the HFRI Emerging Markets Asia ex-Japan Index gaining over 8.5 per cent year-to-date, inclusive of a seven per cent gain in April.
Despite the recent gains, investors withdrew USD9bn from hedge funds investing in Asia in the first quarter of 2009, according to data by Hedge Fund Research, a hedge fund industry data provider.
Total capital invested in the Asian hedge fund industry fell to USD65bn at the end of Q1, approximately USD45bn below the record level achieved at the end of 2007. Globally in the first quarter, investors withdrew more than USD103bn from hedge funds, reducing total industry assets to USD1.33trn.
As a result of positive performance in Q1, funds investing exclusively in emerging Asia or across both emerging Asia and Japan posted a performance-based asset gain of over USD2.6bn. Hedge funds investing in emerging Asia have posted gains in three of the last five months, after losses of nearly 33.5 per cent in 2008. Funds focused solely on Japan, by way of comparison, generated a performance-based asset loss for the quarter of approximately USD575m.
Over 1,000 hedge funds now focus on investing in Asia. This total represents over 15 per cent of the total number of funds in the global industry and exceeds the 12 per cent focusing on Europe. However, Asia-focused funds are characteristically smaller, accounting for 4.9 per cent of total industry assets versus the nine per cent found in European-focused funds.
China is home to the third largest number of hedge fund firms globally. While over 85 per cent of firms are located in the US and the UK, nearly three per cent of firms are headquartered in China. Also reflecting an increasing trend of operating funds in local markets, while 48 per cent of all funds investing in Asia are still located in the US and UK, 20 per cent of funds investing in Asia are located in China, up from 17 per cent one year ago.
‘Hedge funds investing in Asia began the current period of consolidation earlier than the overall industry, but also now appear to be stabilizing earlier,’ says Kenneth J. Heinz, president of Hedge Fund Research (pictured). ‘Global investors are likely to have strong interest in allocating to Asia-focused hedge funds in 2009, as they look to access Asia’s superior secular growth dynamics, supported by the relative stability of the region’s banking sector and global currency reserves.’
