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Q3 assets in Asian hedge funds grow by nearly USD4 billion, Event Driven strategies becoming popular

Q3 saw Asian hedge funds perform strongly according to a new report by US research house, Hedge Fund Research, Inc. Gains in its UCITS-III compliant HFRX China Index were +10.5 per cent for the quarter to leave it at +5.45 per cent YTD; outperforming the Shanghai Composite by nearly 25 per cent. In line with performance, increased investor interest in Asian markets meant that assets into Asian hedge funds climbed nearly USD4billion to USD78billion, of which USD300million came from fresh capital inflows. One revealing aspect picked up on in the quarterly report was the noticeable increase over the last 12 months in Asian hedge funds rolling out Event Driven strategies; they now account for nearly 8 per cent of all Asian hedgies, with half specializing in Activist and Distressed strategies. To shed yet further light on the different dynamics of Asia’s alternatives industry, the report found that Asian Equity hedge funds attracted nearly 66 per cent of capital, in sharp contrast to the rest of the world where such strategies represent less than 33 per cent. It also found that 25 per cent of all new Asian startups were located in China.

Looking specifically at October’s performance for Asian hedgies, the HFRI Asia ex-Japan Index recorded gains of 3.12 per cent, leaving it in a healthy position of +9.60 per cent YTD. This contrasts slightly with current figures for Singapore-based Eurekahedge where Asia ex-Japan funds, albeit the best regional performers, realized gains of 2.86 per cent; +8.91 per cent YTD. Overall, Asia-wide performance was +1.95 per cent; that’s +5.84 per cent for the year. Managers investing in Greater China were October’s best performers, gaining 3.57 per cent. In conjunction with September’s 6.52 per cent gain, Greater China hedge funds have now risen 10.09 per cent over the last two months, helped by strong performance in Chinese equities. Meanwhile, the drag on Japan hedge funds continues – up slightly 0.14 per cent, but relatively flat for the year: +1.40 per cent.

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