Investor capital continued to pour into the Asian hedge fund industry in late 2013 and early 2014, with record inflows and performance driving total investor capital to surpass the record level set in 2007, prior to the 2008 Financial Crisis.
Total capital invested in the Asian hedge fund industry grew to USD112.3 billion according to the latest HFR Asian Hedge Fund Industry Report. Asset growth for both 4Q and January 2014 was driven by investor allocations, as well as performance gains. Investors allocated USD4.2 billion of new capital to the region’s hedge funds in 4Q, the highest quarterly inflows since HFR began tracking in 1Q08, bringing full year 2013 inflows to USD10.5 billion also a calendar year record.
Inflows by hedge fund strategy were dominated by Equity Hedge and Event Driven, which typically exhibit high directional beta to Asian equity and credit markets. Asian Equity Hedge and Event Driven, including Activist and Distressed strategies, experienced inflows of USD2.5 billion and USD1.4 billion in 4Q, respectively, while Macro, including CTA, and fixed income based Relative Value Arbitrage experienced smaller inflows. For the full year 2013, investors allocated USD6.9 billion to Asian Equity Hedge and USD2.2 billion to Asian Event Driven.
Strong performance gains for Asian hedge funds accelerated in 4Q13, with the HFRX Japan Index gaining 6.0 per cent, ending FY13 up 32.8 per cent, only below slightly below the record gain of 33.1 per cent from 2005. HFRX China Index, which gained 7.8 per cent in 4Q and 19.0 per cent for FY 2013, exhibited strong negative correlation to the Shanghai Composite, which declined of 6.75 per cent for the year. The FY 2013 gain for the HFRX China Index was the best full year performance since the Index gained 50.4 per cent in 2009.
Asian capital inflows by region were led by allocations into Japanese-focused hedge funds. For 4Q13, investors allocated USD1.7, USD1.4 and USD1.1 billion, respectively, to pan-Asian, Japan and Emerging Asian hedge fund strategies. For the full year 2013, investors allocated USD2.9, USD4.5 and USD3.0 billion to each of these regions, respectively.
Alternative investment boutique Cheetah Investment Management is targeting the US and Europe as the primary markets in its plans to build its international business.
The Hong Kong-based group, led by value investing veterans V-Nee Yeh and Raymond Wong, is looking to make its existing and future Asia-centric funds available to a greater number of international institutions and investors.
The firm’s chairman, V-Nee Yeh, is a co-founder of one of the largest value fund managers in Hong Kong, Value Partners Group.
Since its creation in 2002 Cheetah Investments has raised the majority of its current USD1 billion in assets under management from Asian investors.
As part of its international push it has hired Brian McDougall for the newly created role of business development director.
McDougall was previously the executive director of Swiss private bank Syz & Co. This followed Syz’s acquisition of Oria Capital, a fund of hedge fund business, which he had co-founded in 2004 and led the firm’s business development strategy.
The group uses a fundamental-driven value-oriented approach to investment to deliver absolute return in Asia and it specialises in a range alternative investment strategies, including long-only absolute return funds, hedge funds, private equity funds and real estate funds.
Leland Lim, who retired as co-head of Goldman Sachs Group Inc. macro trading team in the Asia-Pacific region outside of Japan, plans to start his own Hong Kong-based hedge fund, said two people with knowledge of the matter according to Bloomberg.
The new company aims to start an Asia-focused global macro hedge fund around mid-year, said the people, who asked not to be identified as the information is private. The fund will trade mainly currency and interest-rate instruments, they said.
It joins other Asia-focused macro hedge funds that have started in the past year or are in the works to capture rising investment opportunities. The Eurekahedge Asia Macro Hedge Fund Index gained 9 per cent last year, the largest annual gain in four years, and outperformed the 8 per cent return by the index that tracks global hedge funds across all strategies.
The HFRI Macro Index dropped 1.1 per cent in January, hurt by declining emerging markets, and losses for trend-following funds and those that trade with computer models, Chicago-based Hedge Fund Research Inc. said in a statement dated 7 February.
Lim left Goldman Sachs on Jan. 24, according to his licensing record with Hong Kong’s Securities and Futures Commission. He decided to retire from Goldman Sachs after 17 years with the New York-based bank, according to an internal memo. Edward Naylor, a Hong Kong-based spokesman for Goldman Sachs, confirmed today the content of the memo dated 21 January, declining to comment further.
Lim, 37, joined Goldman Sachs in New York in 1997 on its foreign-exchange options desk and moved to Asia in 1999 to work on such instruments in Hong Kong and Tokyo, according to the internal memo. He managed foreign exchange and interest-rate derivatives trading in the Asia-Pacific region excluding Japan before his appointment to the latest position in 2012, it added. He was promoted to managing director in 2006 and made partner in 2010, according to the memo from the bank’s co-heads of sales and trading Isabelle Ealet and Pablo J Salame.
Goldman Sachs named Hidehiro Imatsu to co-head Asia-Pacific macro trading, including interest-rate and exchange products, with Stuart Riley, according to a separate internal memo also dated Jan. 21. Imatsu was head of macro trading in Japan.
Lim’s departure was not related to regulatory investigations in possible rate-rigging at various banks, said the people. He will lead investments at his own company, said the people said, without naming the firm.