Asian Hedge Funds Build On Strong Gains

by Phillip Morton, Investors Offshore.com

09 November 2009

Asia-focused hedge funds continued to build on strong gains posted in the first half of 2009, with the Hedge Fund Research Emerging Markets: Asia ex- Japan Index returning nearly 9% in the third quarter, according to data released by Hedge Fund Research (HFR).

Assets in Asian hedge funds climbed to USD73.7bn, including USD800m of new capital, the first net inflow of capital since Q2, 2008, HFR announced on November 4. The company also revealed that:

• While both Emerging and Developed Asia experienced performance increases and capital inflows, the performance based asset increases were concentrated in Emerging Asia;
• The percentage of Asian-focused firms headquartered in China is 23.2%, reflecting an increase of nearly 5% since Q3 2008. Similarly, 11.7 % of Asian-focused firms are located in Singapore;
• Performance gains were concentrated in Equity Hedge and Relative Value Arbitrage funds, resulting in an asset increase of over USD3bn;
• While the percentage of Asian hedge funds focusing on Equity Hedge has declined, Relative Value and Macro strategies have increased to 17.6 and 5.1 %, respectively, of total Asian market funds over the last 12 months;

The HFRX China Index gained 6.1% for the quarter and 44.2% year-to-date. Despite declining nearly 23% in August, the Chinese equity market has gained approximately 59% cumulatively over the trailing three years, while the HFRX China Index has gained nearly 80%, the company stated.

“Asian hedge funds demonstrated definitive alpha in the third quarter, displaying strategic versatility while building on strong year-to-date performance,” commented Ken Heinz, President of Hedge Fund Research, Inc.

“The value proposition for global investors looking to access superior growth characteristics continues to be validated by the tactical flexibility exhibited by the Asian hedge fund industry as it continues to evolve," he concluded.

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