Bright outlook for India-focused hedge funds… Alibaba co-founder to back Pinyin Capital Management…
India-focused hedge funds could be poised for their best performance in five years, with strong returns and inflows, according to the latest data from Eurekahedge.
India-focused hedge funds continued to deliver market-beating returns in October 2014. While the BSE benchmark Sensex index mustered a 2.7 per cent gain last month, Indian hedge funds offered a superior 3.5 per cent return in October
Year-to-date, too, hedge fund returns trumped the Sensex’s performance. According to the data, Indian hedge fund returns in the January-October period stood at 36.4 per cent, even higher than the sterling 29.2 per cent rise in the Sensex during the 10-month period. This marks a significant comeback for Indian funds from a dismal 2013, when they posted losses of 8.5 per cent.
The Singapore-based research house has said assets under management (AUM) of India-focused hedge funds have risen to USD2.8 billion so far this year.
The Eurekahedge India index is up 27 per cent this year after registering an 8.25 per cent fall in 2013.
Analysts at the research house said the data is based on only 12 per cent of reporting done by fund houses for October, and the return could jump by close to 40 per cent once all funds report their net asset value (NAV). Hedge funds are most likely to outperform the key equity index, Sensex, by a huge margin this year.
The AUM of India-focused hedge funds had swelled to USD5.5 billion at the peak of the stock market boom in 2007, after which their returns plunged due to the bad name earned in short selling. The last best performance by the hedge fund industry was in 2009, and India-focused funds had given a return of 49 per cent.
The current AUM of Asian (ex-Japan) hedge funds is USD142 billion, according to Eurekahedge data, India-centric hedge funds have been the best performers in 2014. None of the major US, Asia and Europe indices of Eurekahedge show a return of even 10 per cent this year.
Joseph Tsai, vice chairman of Alibaba Group Holding Ltd. (BABA), has pledged the bulk of a USD100 million commitment to a new hedge fund run by former SAC Capital Advisors LP manager Andrew Bazarian, reports Bloomberg.
According to a person with knowledge of the matter, the backing by Tsai, a co-founder of China’s largest e-commerce company, is likely to boost assets in Pinyin Capital Management to more than USD125 million by year-end. The capital commitment will make Pinyin one of the larger startups in Asia this year where the average new hedge fund raised USD21.5 million as of September, according to Singapore-based data provider Eurekahedge Pte.
Tsai has a net worth of USD6.4 billion, according to the Bloomberg Billionaires Index. His estimated wealth was boosted by Alibaba’s USD25 billion US initial public offering in September, the biggest-ever for a technology company.
Alibaba is worth USD243 billion, surpassing Facebook Inc. and more than the combined market value of Amazon.com Inc. and EBay Inc., according to data compiled by Bloomberg.
Tsai is using his personal wealth to invest in Pinyin’s pan Asian equity long-short fund, instead of capital from Alibaba, the person said. The first installment of the USD100 million capital will come into the fund by early November.
As figures for October come in 2014 is shaping up to be a mediocre year for hedge fund performance so far.
From a strategic perspective hedge funds with a long-short equity strategy continue to reap the benefits of a buoyant market, rising by nearly 50 per cent this year. In October, however, their returns were muted, at just 3.49 per cent, their poorest gain since April. Even multi-strategy hedge funds have put up a decent performance in 2014, with 19.9 per cent returns.
However, investors are unlikely to be enthused by their marginal loss (0.03 per cent) in October.
The party in India notwithstanding, hedge funds have been having a tough time globally in 2014. They have only notched up gains of 1.6 per cent during the year thus far, compared to an 8.7 per cent increase in the whole of 2013. Further more, in the last three months, they have lost 1.2 per cent.
North American funds, on the other hand, delivered a 3.1 per cent return in 2014, though negative returns in the past two months have dampened the mood. Meanwhile in Europe, funds have just managed to stay in the green with 0.07 per cent returns, while Asia and emerging market-oriented funds have gained 5.1 per cent and 4.7 per cent, respectively. Latin America-focused hedge funds rose 3.1 per cent in the January-October 2014 period.
The Swiss banking group SYZ & CO strengthens its Hong Kong team
with the arrival of Suzanna Wong as Head of Sales Asia and Hong Kong office head.
In the Asian region, SYZ & CO (Hong Kong) targets private bank distribution and institutional investors, such as pension funds, financial institutions, multi-family offices and sovereign funds. The role of the office is to promote the Group's asset management activities and expertise to institutional investors.
Suzanna Wong will be responsible for sales and business development in Asia for SYZ Asset Management, the Group's institutional asset management entity. Prior to joining SYZ & CO, Suzanna Wong was an Executive Director and Head of Sales Asia for Swiss & Global Asset Management (formerly Julius Baer Asset Management).
“We have identified strong demand in Asia for innovative products with high added value and we are enthused by the region's extraordinary dynamism. We are very happy to have Suzanna Wong on board and are confident that Suzanna will be a significant asset to our development”, explained Eric Syz, CEO.