Abenomics may have proven something of a disappointment so far, but the pro-growth and stimulus policies of Japanese Prime Minister Shinzo Abe could still prove a boon to hedge funds focused on the country.
Japan-focused hedge funds could grow by 20% this year, Bloomberg News reports, amounting to an increase of US$3 billion to the US$15.1 billion industry. Japanese hedge funds are up almost 18% this year as Abe's policies have significantly weakened the yen.
"Japan is finally coming back," Eurekahedge's Satoshi Iwanaga told Bloomberg. "The Abenomics euphoria has put a spotlight back on Japan. Investors are after those with high returns, and Japan is where you can find that now."
Japan-focused hedge funds managed US$39 billion in 2006 before a series of scandals, poor performance and the lagging Japanese economy took their toll.
Japanese stocks tumbled last week after Abe introduced his reform package, which market players felt did not go far enough. But Iwanaga said he was not spooked.
“The market simply went up too fast,” he said. “It would have been unnatural to keep going at the same pace.”