Surging Asian equity markets in the second quarter of 2009 contributed to the strongest performance in nearly a decade for Asia-focused hedge funds, according to figures released by Hed
Surging Asian equity markets in the second quarter of 2009 contributed to the strongest performance in nearly a decade for Asia-focused hedge funds, according to figures released by Hedge Fund Research.
The HFRI Emerging Markets: Asia (ex-Japan) Index gained 18.86 per cent during the quarter, the strongest quarterly performance gain since quarter four 1999, when the index gained 21.36 per cent.
Performance-based asset gains in the second quarter totalled USD6.8bn for Asia-focused funds, while investor withdrawals declined to USD3.6bn, a sharp drop from the more than USD17bn withdrawn in the previous two quarters combined.
Overall, assets in the Asian hedge fund industry increased by USD3.2bn to USD68.2bn, the first increase since the second quarter of 2008.
The HFRX China Index, a composite of funds focusing specifically on investing in China, gained 19.82 per cent in the second quarter and 35.86 per cent in the first half of 2009, the best six-month performance since the index’s inception in January 2005. While gains in hedge funds focusing on China are comparable with broader Chinese equity markets over the past three years, hedge funds have posted these gains on significantly lower volatility, creating attractive risk-adjusted performance.
Over the last three years, the HFRX China Index has gained 69.4 per cent cumulatively versus aggregate gains of approximately 77 per cent by the broad-based Shanghai Composite; however, the HFRX China Index has produced these gains on an annualized volatility of 16.9 per cent, while the Shanghai Composite has experienced an annualized volatility of 42 per cent.
Hedge fund firms investing in Asia are continuing to locate in China, which is now home to the second-highest number of Asia-focused hedge funds. The percentage of Asia-focused hedge funds located in China increased to 23.6 per cent, an increase of over five per cent from one year ago. The number of Asia-focused funds based in China has surpassed the number headquartered in the UK and is approaching the number of Asia-focused funds located in the US.
‘Investors looking to access growth in 2009 and in coming years will be allocating to Asia-focused hedge funds,’ says Kenneth Heinz, president of Hedge Fund Research. ‘As the Asian hedge fund industry continues to evolve, the diversity of strategy offerings continues to increase and more funds are locating in Asia, enhancing the robustness and appeal of the industry for global investors.’
