Investors allocate USD3bn to Asia in Q2… positive July boosts fund performance…
Investors poured another USD3 billion to Asian hedge funds in the second quarter, with a particular emphasis on equity strategies and Japan-focused funds.
According to the latest HFR Asian Hedge Fund Industry Report, total capital invested in the Asian hedge fund industry increased to over USD98.4 billion in Q2 2013, the highest total since 2007.
Asian equity hedge strategies pulled in a net USD2.2 billion from investors in the second quarter while Asian-focused event driven and relative value arbitrage funds recorded net inflows of USD390 million and USD358 million, respectively. Hedge funds focused on Japan received over USD1.7 billion in net new capital, bringing total Japan-focused hedge fund capital to USD24.8 billion, the highest level since Q2 2008, prior to the financial crisis.
“Increased capital allocations to Asian hedge funds in the second quarter is another data point which underscores the significance of the Asian hedge fund industry to global investors while the Q2 2013 performance validates the strategic significance of hedged long/short exposures through what have become divergent equity markets of Developed and Emerging Asia,” said Kenneth J. Heinz, president of HFR.
“Asian hedge funds have effectively implemented sophisticated hedge fund strategies which reduce excessive return volatility and equity market beta while maintaining exposure to powerful secular growth trends. With various themes developing into 2H13, including continuation of Bank of Japan stimulus measures, convergent economic growth rates in Emerging Asia and systemic risk associated with off balance sheet liabilities of financial institutions, both Asian and global investors are likely to increase allocations to Asian hedge funds and benefit from these tactical performance dynamics.”
Total global hedge fund industry capital increased by nearly USD40 billion in Q2 to a record USD2.41 trillion.
Hedge funds returned to making gains in July as global markets bounced back from a retreat in June. The Eurekahedge Hedge Fund Index was up 0.90 per cent during the month, the MSCI World Index was up by 4.83 per cent in July.
All major hedge fund investment regions, witnessed positive returns in July. The Eurekahedge Asia ex Japan Hedge Fund Index saw the strongest gains among all regional mandates – up 1.97 per cent, outperforming the MSCI Asia ex-Japan Index which was up 1.84 per cent in July. North American hedge funds posted gains of 1.21 per cent during the month as the S&P 500 surged 4.95 per cent in July on the back of upbeat earnings, Fed announcements as well as positive macroeconomic data. Japanese hedge funds outperformed the underlying markets for the third consecutive month, gaining 1.10 per cent despite declines in the Tokyo Topix (down 0.19 per cent) and the Nikkei 225 (down 0.07 per cent).
Most strategies finished the month in positive territory with the exception of CTA/managed futures funds. The Eurekahedge Long Short Equities Hedge Fund Index saw the strongest gains of 1.95 per cent in July, as most global equity markets rallied with the S&P500, FTSE100 and Hang Seng climbing 4.95 per cent, 6.53 per cent and 5.19 per cent respectively.
Event driven funds were up 1.54 per cent as the strong IPO and M&A volume in 2013 continued to provide various opportunities for the funds. Distressed debt funds delivered positive returns for yet another month and are up 9.02 per cent year-to-date. The Eurekahedge
CTA/Managed Futures Index was the only strategy which saw negative returns of 0.61 per cent in July and 2.12 per cent year-to-date as systematic traders with a global mandate suffered losses. North American CTA/managed futures managers fared relatively better with discretionary strategies witnessing gains of 1.16 per cent in the month.
Eurekahedge’s key points for July 2013:
- Hedge funds up by 0.90 per cent in July, with 70 per cent of reporting funds delivering positive returns during the month
- Funds of hedge funds outperformed single manager funds in July, up 0.98 per cent and remain ahead year-to-date
- Japanese hedge funds outperformed the Nikkei 225 for the third consecutive month, up 18.63 per cent as at end-July 2013
- Hedge funds witnessed positive asset flows in July; net allocations for the year currently stand at USUSD75 billion
- As at end-July 2013, Eurekahedge is currently tracking more than 550 funds that have delivered over 15 per cent, 300 funds that are up more than 20 per cent and 100 funds up more than 30 per cent
Unigestion has sought to bolster its presence in Asia after securing a Capital Markets Services Licence from the Singapore regulator.
The licence is essential for any asset manager wishing to run a fund management unit in Singapore and the firm said it will significantly enhance the extent to which it can market its products in the region.
The Geneva-based firm already has a Singapore-based office that is led by Bill Foo, Unigestion Asia chairman, who was appointed in the last two years as part of the group’s plan to increase its presence in Asia.
In January this year Aje Saigal, a former managing director and head of strategy at GIC (Government of Singapore Investment Corporation), was also brought on board as a non-executive director for Asia.
The firm is now in a position to market its equities, private equity and hedge fund offerings in the region at a time when increasing numbers of Asian institutional investors are seeking bespoke investment solutions.
A trio of former Goldman Sachs MDs are set to launch an Asian multi-strategy hedge fund.
Koji Gotoda, Takayuki Kasama and a third former Goldman MD have founded Golvis Investment in Singapore. The new firm also features a further six Goldman veterans among its roughly 11 initial employees,Bloomberg News reports.
Golvis will focus initially on Japan, where the firm's three founders worked at Goldman. It will invest across all asset classes.
Gotoda was head of Asian convertible bond trading and Kasama co-head of Japanese credit trading. The latter left the bank in June and the former in July. Golvis' head of business development is Ryan Collins.
Gotoda will meet with potential investors in October at Goldman's annual hedge fund event in Singapore.
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