Asian equity hedge funds staged a strong comeback in May, recouping losses sustained in April’s tariff-fuelled sell-off and returning to year-to-date performance highs, according to a report by Reuters citing a recent Goldman Sachs note.
Fundamental long-short equity strategies across Asia have returned 1.6% month-to-date as of 22 May, lifting 2025 gains back to 6.1% – matching their Q1 peak. The rebound has been underpinned by broad-based equity strength, particularly after the temporary de-escalation of US-China trade tensions.
Regionally, China-focused fundamental managers posted gains of 1.3%, while Japan-focused peers advanced 0.8%, per Goldman estimates. However, performance has trailed broader benchmarks, with the MSCI Asia-Pacific Index up over 4% in the same period. Managers had sharply de-risked portfolios in early April, leaving some underexposed to the market’s sharp rebound.
Return dispersion has widened significantly since April, particularly among Japanese equity managers, reflecting varied positioning across funds, according to Patrick Ghali, Managing Partner at Sussex Partners.
Despite persistent macro uncertainty – including ongoing tariff and geopolitical risks – risk appetite among managers appears to be firming. Goldman reported a notable uptick in net exposure, which rose to 50.8% as of 22 May, up from 46% at April’s end.
