Asia ex-Japan funds outperform year-to-date… Asian Sovereign Wealth & Pension funds looking increasingly at alternatives…
Asia ex-Japan hedge funds lead global peers with year-to-date returns of 6.66 per cent, due in large part to a 25.79 per cent rise in Indian equities since the start of the year, according to the latest data released by hedge fund research firm Eurekahedge.
Funds investing in North and Latin American came in second and third place, delivering returns of 5.21 per cent and 3.71 per cent respectively.
Japan focused funds returned 2.92 per cent, while European managers came in last place at 1.31 per cent.
As a whole, hedge funds were up 3.82 per cent year-to-date, registering performance-based gains of USD56.4 billion while witnessing net asset inflows of USD60.7 billion so far this year.
Currently, assets under management of funds of hedge funds have recovered to USD529.3 billion, an increase of USD5.7 billion from December 2013.
In Asia Pacific, sovereign wealth funds (SWFs) and pension funds have been diversifying their investments into new markets and asset classes. Alternatives are now playing a larger role in their investment portfolios.
According to Dan McNicholas, head of alternative investment sector solutions, Asia Pacific, at State Street, these are more complex investment strategies. “We have been providing our clients with solutions to address new regulatory constraints, better manage risk and monitor underlying manager performance and liquidity. Investments into these asset classes are typically made through fund-of-funds, managed accounts or through in-house investment teams. Our suite of services for the limited partner sector across hedge, private equity and real estate continues to evolve and become more specialised to meet the increasing needs of our clients.”
Peter Jordan, head of global fund services, Asia Pacific, at Northern Trust, also says he has observed an increasing demand from institutional investors across the region for solutions that support improved governance and transparency. “As a result, our focus has been on refining tools that help clients with risk oversight, enabling them to focus on their search for alpha. The convergence between traditional asset managers and alternative asset managers is evolving, with it comes the need for greater transparency and improved data delivery,” he explains.
Asia is also an attractive market for foreign hedge funds, attracted by the region’s large pools of capital held by institutional investors. Earlier this year, Northern Trust announced that its hedge fund administration business would provide local market expertise and solutions to hedge fund clients as they participate in the Shanghai Qualified Domestic Limited Partner (QDLP) programme, Mr. Jordan reveals. This specialist fund administration capability is now offered directly from Northern Trust’s Beijing office.
Goldman Sachs Group Inc.’s asset management unit agreed to back Hong Kong-based hedge fund startup Trilogy Partners Ltd., reports Bloomberg.
The capital will be provided by the bank’s hedge-fund seeding team, said a person with knowledge of the matter. Trilogy’s Asia-Pacific equity long-short hedge fund started trading last month.
Connie Ling, a Hong Kong-based spokeswoman for Goldman Sachs, and Ben Parker, Trilogy’s chief operating officer, declined to comment.
Goldman Sachs is joining the fray in a year that saw peers such as KKR & Co. dipping into the business of backing Asia hedge-fund startups for the first time, while Blackstone Group LP made another such investment.
Trilogy Managing Partner Lin Xiao and its other partners, Li Yunguang and Cecilia To, were members of PCA Investments’ equities team. PCA was the only hedge-fund manager known to have been backed by China Investment Corp., the nation’s sovereign wealth fund.