Asian hedge fund specialists GFIA said Asian fund managers ended January with low net exposures, with selective net short exposures in countries such as Thailand, Indonesia and Malaysia.
GFIA founder Peter Douglas said, "MPA Asia ended its sixth straight positive month with a remarkable 1.32 per cent, with most of its returns derived from its short exposure in China and ASEAN. Dalton Asia (4.8 per cent) also benefited from its short positions in Japan and Australia, which took up -32 per cent and -11 per cent of the fund’s short exposure respectively. Despite a higher than normal long-short ratio, Ashoka’s (0.5 per cent) short positions also contributed a handsome 4.4 per cent to the fund’s return."
GFIA noted that the global equity markets had a weak start for the year due to concerns about the Fed’s tapering. Emerging markets took the largest hit with MSCI Emerging Markets Index falling 6.6 per cent. More specifically in Asia, investor sentiment declined further following negative headlines in China relating to the liquidity crunch, a surge in short term funding rates, and the perceived stability of investment trust products.
Managers running Asia equity long short strategies reported a fairly wide range of returns, but most of them managed to outperform the AsiaHedge Asia ex Japan Index (-2.3 per cent). Funds staying on the positive side mainly derived their returns from their shorts, the hedge fund specialist added.
Long-short managers who ended January in the red managed to limit their losses in comparison with the indices. Despite reducing its net exposure from 32 per cent to 2 per cent, long biased SEA Crest Fund retreated 0.8 per cent as its positions in Malaysia, China and Korea did not hold up well in the downward trending environment. New Harbor Asia’s portfolio (-4.4 per cent), with a relatively high net exposure of 86.1 per cent, was badly hit by this month’s sell off.
The first two trading days in March saw the Asian markets subdued as the world awaits development in the unfolding crisis in Ukraine amidst fears the tension in that region could escalate into a full-blown military conflict.
Hedge funds posted broad gains in February, according to a set of industry beta indices.
All six of the Market Vectors Index Solutions Hedge Fund Beta Indices gained ground last month, although none did as well as the broader markets, with the Standard & Poor’s 500 Index ending February at a record high.
North America long/short equity funds did best, rising 2.58 per cent in February. Global long/short equity funds returned 2.39 per cent, emerging markets long/short equity funds 2.15 per cent, Western Europe long/short equity funds 1.6 per cent, developed Asia long/short equity funds 1.38 per cent and global event long/short equity funds 1.22 per cent.
Bloomberg reports that Anil Ahuja, former Asia head of private-equity firm 3i Group Plc, is seeking to raise USD100 million from institutional investors for an India-focused hedge fund.
IPEplus Fund 1, which invests in stocks, bonds and currencies, started in October with USD10 million of Ahuja’s own capital, he said. Ahuja, who left the U.K.’s biggest publicly traded private-equity firm in February last year, is seeking to raise the money by the year-end, with the first USD40 million by June, he said.
Ahuja, 51, is turning to a hedge-fund strategy as returns from private equity in Asia’s third-largest economy slow and the number of unsuccessful exits has exceeded winning ones since 2006. While India’s growth prospects attracted global firms such as Blackstone Group LP andKKR & Co. the average return of private-equity funds investing in the country fell by more than half in 2013 from 7.7 times in 2004, according to researcher Venture Intelligence.
“There are a handful of people who have made money, but the Indian private-equity domain has not performed,” Singapore-based Ahuja said in an interview on 26 February. “The right tool kit for India has to be very different.”
IPEplus Fund 1 will invest in asset classes including futures, options, warrants, convertible securities, derivative instruments and synthetic financial instruments primarily related to Indian companies that are quoted on stock exchanges, according to the term sheet of the fund. The Bermuda-listed fund, which seeks to exploit macroeconomic trends, has returned 8.9 per cent since inception and targets an annual return of as much as 14 per cent net of fees, it said.
Ahuja’s new hedge fund is officially managed by a unit of Carlyle Group LP-backed Indian stock broker India Infoline Ltd. It will charge a 1 per cent annual management fee and 10 per cent for performance if the net asset value of the fund increases beyond the previous reporting period’s high, according to the term sheet. The fees will be split in an undisclosed proportion between the India Infoline unit and Ahuja, he said.