Asian Hedge Funds Approach Record Asset Levels

May 9 2013 | 11:32am ET

Asian hedge funds are nearing a major milestone, thanks to renewed interest in Japan.

The Asian industry's assets under management rose 7.6% in the first quarter to hit almost US$95 billion, according to Hedge Fund Research, putting it on track to top both the US$100 billion threshold for the first time in six years, and to break its record level, US$111.4 billion, reached in 2007.

Asian hedge funds bottomed out in 2008, at US$71.4 billion. The turnaround is credited to Japanese hedge funds, which have seen soaring interest and returns in the wake of the election of Prime Minister Shinzo Abe.

"The past four months have been an unprecedented period for Japanese capital markets and have created tremendous opportunities for Asian hedge funds in 2013," HFR President Kenneth Heinz said. "Aggressive stimulus measures by the Bank of Japan have not only created opportunities in Japanese equity markets, but also driven down yields in global fixed-income markets, increased currency volatility and contributed to recent commodity volatility as the global growth and inflation picture continues to evolve."

Despite the growth, Asian hedge funds still lag their global peers, which returned to their 2007 peaks in 2010 and continue to grow.

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