Preqin: APAC Investors More Upbeat About Hedge Funds Than Regional Counterparts

Apr 6 2017 | 7:13pm ET

Investors in Asia remain more upbeat about hedge funds than their counterparts in other parts of the world despite plans to reduce allocations in the short-term, according to research from industry data provider Preqin. 

Preqin’s November 2016 investor survey found that although investor dissatisfaction with performance was prevalent, less than half of Asia-Pacific-based investors said their portfolios had not met expectations, compared with two-thirds of all other investors. 

Asia-Pacific-based investors also have mixed intentions for their hedge fund portfolios over the short and long term, Preqin said in a statement. The majority intends to invest less capital in 2017 than in 2016, but over the longer term, less than a third intend to reduce their exposure. Meanwhile, an equal proportion look to increase it, twice the proportion of investors in other regions planning to hike allocations to hedge funds in the long term. 

Other Key APAC-Based Hedge Funds Facts: 

  • Asia-Pacific-based hedge fund managers posted gains of 2.81% through 2016, their lowest annual return 
since 2011 (-5.95%). This compares with gains of 7.40% for the global industry. 

  • Despite this, 57% of APAC-based investors believe 2016 performance met or exceeded their expectations, almost twice the proportion (33%) of investors in other markets that think the same. 

  • However, investor confidence in hedge funds remains low in Asia-Pacific: just 14% of investors plan to invest more capital in hedge funds in 2017, compared to 57% that plan to decrease their short-term exposure to the asset class. 

  • Over the longer term, 29% of Asia-Pacific-based investors intend to increase their exposure to hedge funds, while the same proportion intend to reduce it. 

  • A similar proportion of global investors (31%) intend to reduce their long-term investment in the asset class, but only half the proportion (15%) of investors in other regions also plan to invest more in hedge funds. 

  • Equity strategies, macro strategies and relative value strategies funds are all set to see inflows from Asia- Pacific-based investors in 2017, as significant proportions of investors indicate that they intend to invest more to these strategies. 

“Although the hedge fund industry in Asia-Pacific is smaller than in North America and Europe, it has seen significant growth recently,” said Amy Bensted, head of hedge fund products for Preqin, in the statement. “Many investors in the region have only begun investing in recent years, and typically invest smaller proportions of their portfolios in hedge funds. The region could be a source of significant capital inflows in future years, as the portfolios of these investors grow and mature. 

“The short-term outlook is less positive, with investors in the region, in a similar vein to investors globally, planning to reduce their exposure to hedge funds in the next 12 months,” she added. “Like other regions across the globe, the twin issues of fees and performance will be central to the discussion around hedge funds in 2017.”

In Depth

PAAMCO: Will Inflation Deflate the Asset Bubble?

Jan 30 2018 | 9:49pm ET

As the U.S. shifts from monetary stimulus to fiscal stimulus, market pricing should...


CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Boost Hedge Fund Marketing ROI By Raising Your ROO

Feb 14 2018 | 9:57pm ET

Tasked with delivering returns on client capital, a common dilemma for many alternative...