Preqin’s latest Hedge Fund Spotlight reveals that hedge funds focusing on the Asia Pacific region posted significant returns in January and February 2013 of 3.97 per cent and 2.18 per cent in each month respectively. This is in comparison to North American and European hedge funds, which posted only 0.61 per cent and 1.24 per cent in February respectively.
Asia Pacific hedge funds outperformed other regions over the last 12 months, returning 10.71 per cent compared to 9.37 per cent for North America-focused hedge funds and 6.88 per cent for Europe-focused hedge funds.
Performance for hedge funds across all strategies and regions declined from 2.47 per cent in January to 0.39 per cent in February.
Emerging markets-focused funds posted negative returns in February of -0.08 per cent.
Funds of hedge funds across all strategies and regions posted only 0.05 per cent in February, after a strong January with returns of 2.10 per cent.
Other findings in this month’s Preqin Hedge Fund Spotlight demonstrate that 79 per cent of investors believe that hedge fund performance in 2013 will beat that of 2012.
The rally in Japan since new Prime Minister Shinzo Abe pledged to jump-start growth is starting to stir investor interest in hedge funds that invest in Asia’s second-largest economy.
Japanese hedge funds returned 11.3 per cent from December through February, the best three-month result on record, according to Eurekahedge Pte, as the Bank of Japan’s effort to expand monetary easing weakened the yen and boosted stocks. Overseas investors have stepped up purchases of Japanese equities, including a record net 1.02 trillion yen (USD10.6 billion) in the week to March 8, data compiled by the Tokyo Stock Exchange shows.
The benchmark Topix index has surged 45 per cent since 14 November, when the elections that returned Abe to power the following month were announced. The yen has weakened about 15 per cent against the dollar since mid-November, helping boost the value of exporters’ earnings abroad as Abe called for unlimited money printing by the BOJ to overcome persistent declining prices.
The Topix gained 0.8 per cent at the close in Tokyo as the yen weakened.
Hedge funds that invest in Japan have a big hole to climb out of. Assets have declined more than 60 per cent since they peaked in 2006 and stood at USD14.3 billion at the end of February after losing net USD50 million in the first two months of this year, according to Singapore-based Eurekahedge.
Investors grew weary after the collapse of Livedoor Co. in 2006 for fabricating profits sparked concerns about the finances of smaller-cap Japanese companies that many hedge funds had invested in. That was followed by the global financial crisis in 2008 and the covered-up losses at AIJ Investment Advisors Co. last year.
Japan’s consumer prices haven’t risen since the late 1990s and sovereign debt has ballooned to more than double gross domestic product.
Ascalon Capital Managers Ltd, a company owned by Westpac Banking Corp. (WBC) that invests in hedge- fund managers, bought a 30 per cent stake in Singapore-based RV Capital Management Pvt as it expands its Asian investments.
The acquisition includes an investment in RV Capital’s flagship Asia Opportunity Fund, which bets on rising and falling securities in the region’s rates, credit and foreign exchange markets, Ascalon said in an e-mailed statement.
The latest investment was Ascalon’s third in Asia, where the shrinkage of funds of hedge funds has left its predominantly small managers starving for capital. Almost 54 per cent of Asian hedge funds oversee less than USD50 million of assets, according to Singapore-based Eurekahedge Pte, making them too small to attract capital from international institutions which prefer larger managers.
“RV Capital is led by experienced investors who have operated at the highest level for many years,” Chuak Chan, Hong Kong-based chief executive officer of Ascalon, said in the statement. “We believe RV Capital is poised for strong future growth.”