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Asian hedge funds navigate volatility in Q3 2009

Asian hedge funds navigate volatility in Q3 2009

Asia-focused hedge funds continued to build on strong gains posted in the first half of 2009, with the HFRI Emerging Markets: Asia ex-Japan Index returning nearly nine per cent in the third quarter, according to data from Hedge Fund Research. 

Assets in Asian hedge funds climbed to USD73.7bn, including USD800m of new capital, the first net inflow of capital since Q2 2008.

While both emerging and developed Asia experienced performance increases and capital inflows, the performance based asset increases were concentrated in emerging Asia.

The percentage of Asian-focused firms headquartered in China is 23.2 per cent, reflecting an increase of nearly five percent since Q3 08. Similarly, 11.7 per cent of Asian-focused firms are located in Singapore.

Performance gains were concentrated in equity hedge and relative value arbitrage funds, resulting in an asset increase of over USD3bn. While the percentage of Asian hedge funds focusing on equity hedge has declined, relative value and macro strategies have increased to 17.6 and 5.1 per cent, respectively, of total Asian market funds over the last 12 months.

The HFRX China Index gained 6.1 per cent for the quarter and 44.2 per cent year-to-date. Despite declining nearly 23 per cent in August, the Chinese equity market has gained approximately 59 per cent cumulatively over the trailing three years, while the HFRX China Index has gained nearly 80 per cent. 

“Asian hedge funds demonstrated definitive alpha in the third quarter, displaying strategic versatility while building on strong year-to-date performance,” says Ken Heinz, president of Hedge Fund Research. “The value proposition for global investors looking to access superior growth characteristics continues to be validated by the tactical flexibility exhibited by the Asian hedge fund industry as it continues to evolve.”

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