Hedge funds that pivoted from China to Japan in 2023 have struggled to make money, according to a report by Reuters. The report notes that even though Japan is the third largest economy, fund managers have struggled to make sense of the market. 

Citing data from Preqin and Goldman Sachs, the report notes that Japan-focused funds launched in 2023 surpassed China ones for the first time in 17 years, and Japan's stock market has seen the largest hedge fund inflows globally this year, part of the reason the Nikkei Average index hit a 33-year peak.

However, Japan requires traders to have a deep understanding of its cash-rich multinationals and lesser-known small businesses, corporate reforms and shareholder activism which has hamstrung fund managers, the report cautioned.