Although performance was hardly stellar last year, Asian hedge funds nevertheless still managed to outperform the region’s volatile whipsawing markets according to new data released by Hedge Fund Research this week. Its benchmark HFRX Asia with Japan Index posted a slight gain of 0.4 per cent in Q4 2011 to end the year down 5.2 per cent, topping the Nikkei 225 and Shanghai Composite Index by nearly 12 per cent and 17 per cent respectively. The recently launched HFRX Korea Index gained 4.8 per cent in the fourth quarter and despite recording losses of 7.5 per cent for the full calendar year it still outperformed the benchmark Kospi Index by 350 basis points. As for total capital in Asian hedge funds, Q4 saw net outflows of USD1.04billion – the first quarterly decline since Q1 2010 – but over the course of the year the region enjoyed net inflows of USD6.6billion. Perhaps surprisingly, given the volatility of equity markets, two-thirds of capital invested in Asian hedge funds went to equity hedge funds, with event-driven and relative value arbitrage also enjoying net inflows.
HFR also found that the total number of Asian hedge funds continued to increase with those located in China increasing to 28.6 per cent in the second half of 2011. Conversely, those located in the US declined to 26.4 per cent. “The increased proliferation of specialized, Asian-located funds executing on uncorrelated, market neutral strategies and the relative performance benefits these offer are likely to attract capital from both Asian and global investors as cyclical risk tolerance increases in 2012,” commented Kenneth J Heinz (pictured), President of HFR.