Investors Pour $3B Into Asian Hedge Funds In Q2

Aug 12 2013 | 8:14am ET

Investors entrusted another $3 billion to Asian hedge funds in the second quarter, with a special emphasis on equity strategies and Japan-focused funds.

According to the latest HFR Asian Hedge Fund Industry Report, total capital invested in the Asian hedge fund industry increased to over $98.4 billion in Q2 2013, the highest total since 2007.

Asian equity hedge strategies pulled in a net $2.2 billion from investors in the second quarter while Asian-focused event driven and relative value arbitrage funds recorded net inflows of $390 million and $358 million, respectively. Hedge funds focused on Japan received over $1.7 billion in net new capital, bringing total Japan-focused hedge fund capital to $24.8 billion, the highest level since Q2 2008, prior to the financial crisis.

“Increased capital allocations to Asian hedge funds in the second quarter is another data point which underscores the significance of the Asian hedge fund industry to global investors while the Q2 2013 performance validates the strategic significance of hedged long/short exposures through what have become divergent equity markets of Developed and Emerging Asia,” said Kenneth J. Heinz, president of HFR.

“Asian hedge funds have effectively implemented sophisticated hedge fund strategies which reduce excessive return volatility and equity market beta while maintaining exposure to powerful secular growth trends. With various themes developing into 2H13, including continuation of Bank of Japan stimulus measures, convergent economic growth rates in Emerging Asia and systemic risk associated with off balance sheet liabilities of financial institutions, both Asian and global investors are likely to increase allocations to Asian hedge funds and benefit from these tactical performance dynamics.” 

Total global hedge fund industry capital increased by nearly $40 billion in Q2 to a record $2.41 trillion.

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