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Asian hedge funds attract USD1.4billion in Q3

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Asian hedge funds attracted USD1.4billion in net new assets in Q3 from global hedge fund investors, marking a sixth consecutive quarter of inflows according to t

Asian hedge funds attracted USD1.4billion in net new assets in Q3 from global hedge fund investors, marking a sixth consecutive quarter of inflows according to the latest edition of the Asian Hedge Fund Industry Report published by Hedge Fund Research. However, performance-based asset declines meant that total AUM for the region fell quarter-on-quarter from USD89.4billion to USD82.6billion: the first quarterly decline since Q2 2010. Despite poor performance, Asian hedge funds still outperformed Asian equity indices. The HFRX China Index fell -3.4 per cent in Q3 and is down -5.4 per cent for the year. In contrast, the Shanghai Composite Index fell some -14.5 per cent in Q3 and is down roughly -16 per cent for the first three quarters of 2011. Investors have allocated USD7.6billion in net inflows to Asian hedge funds through September this year, accounting for 10 per cent of the USD70.7billion in net inflows allocated to global hedge funds.

Equity hedge fund strategies and funds with pan-Asian exposure attracted inflows of over USD1billion and nearly USD1.6billion respectively, whilst Asian Macro funds and those focusing on Emerging Asia recorded modest outflows. “In what proved to be a challenging quarter for global financial markets, investors affirmed their ongoing and forward looking commitment to Asian hedge funds,” commented HFR President, Kenneth J Heinz (pictured). He said that Asian hedge funds represent a crucial area of growth potential for investors, adding: “Asian financial markets and institutions have become powerful drivers of global macro trends in currency and commodity markets and Asian hedge funds offer global investors specialized local market expertise and tactical exposure to these powerful trends.”          

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