Total capital in Asian hedge funds has hit a record US$112.3 billion, according to the latest HFR data.
Inflows and performance in late 2013/early 2014 drove total investor capital to surpass the record level set in 2007.
Investors allocated US$4.2 billion of new capital to the region’s hedge funds in Q4 2013, the highest quarterly inflows since HFR began tracking in Q108. Full-year 2013 inflows totaled US$10.5 billion, also a calendar year record.
Equity hedge and event-driven strategies attracted the highest Q4 inflows, of $2.5 billion and $1.4 billion, respectively. Macro strategies (including CTAs) and fixed-income based relative value arbitrage experienced smaller inflows.
In terms of performance, Asian hedge funds saw gains accelerate in Q413, with Japan funds adding 6.0% to end 2013 up 32.8%. China funds gained 7.8% in Q4, and ended the year up 19.0%.
Investors allocated US$1.7 billion to pan-Asian funds in Q413 ($2.9 billion for the year); US$1.4 billion to Japan-focused funds ($4.5 billion for the year); and US$1.1 billion to emerging Asian hedge fund strategies (US$3.0 billion for the year).
According to Kenneth J. Heinze, HFR president, 2013 was “an exceptional year for the Asian hedge fund industry, posting strong performance gains across the region as assets surpassed the pre-financial crisis peak, both despite divergent equity market trends across developed and emerging Asia.
“The Asian hedge fund industry has now emerged as the preferred mechanism for both global and Asian investors to participate in the exciting growth opportunities while mitigating complex risks associated with quantitative easing, currency devaluation or prospective RMB appreciation and structural concerns regarding banking institutions. Despite EM-centric currency and equity volatility to begin 2014, investors are likely to increase allocations to Asian hedge funds as these themes evolve in 1H14.”