HFR: Asian Hedge Fund AUM Surges In Q2, Tops $117B

Aug 4 2017 | 9:14pm ET

Strong performance among Asian hedge funds through the second quarter is having an effect on asset flows, according to new data from Hedge Fund Research, with the alternative investment segment seeing its first quarterly inflows in two years and bringing Asian hedge fund capital to its highest level since the fourth quarter of 2015. 

The gains were led by funds investing in China and India, HFR said in its latest HFR Asian Hedge Fund Industry Report. The HFRX India Index gained +6.4% in the second quarter, bringing YTD performance to +26.6%, topping the Sensex 30 Index by over 1000 basis points for 1H17.  Chinese hedge funds as tracked by the HFRX China Index rose +5.2% in 2Q17 is up +16.2% for 1H17 - topping benchmark measures of Chinese equities in 1H17 by more than 1300 basis points. 

Total capital invested in Asian hedge funds rose to $117.1 billion, a quarterly increase of $6.7 billion, HFR said. New net capital inflows totaled $1 billion. Total capital invested in China-focused hedge funds increased to $52.5 billion through mid-year, a YTD increase of $3.9 billion. 

Other highlights from HFR's Asian Hedge Fund Industry Report: 

  • Asian-located hedge funds investing in Equity Hedge (EH) and Event-Driven (ED) strategies led performance through mid-year, with Asian-located EH funds returning +12.2% in 1H17, while Asian-located ED funds gained +10.5%. Both metrics outperformed their respective broad-strategy HFRI peers.
  • The HFRI EM: Asia ex-Japan Index gained +15.0% in 1H17, which, alongside contributions from funds investing in Middle East, Russia/Eastern Europe and Latin America, drove HFRI Emerging Markets (Total) Index performance to +9.6% in 1H17.
  • Hedge funds focused on Japan were also up through 1H17 as the Japanese Yen climbed against the U.S. dollar, with the HFRI Japan Index advancing +3.0% in 2Q17, bringing 1H17 gain to +6.8%. This topped the performance of the Nikkei 225 by approximately 200 basis points. Total capital managed by hedge funds focused on Japan rose to $28.6 billion through mid-year.

"For the second consecutive quarter, Asian hedge fund performance was led by exposures to India and China, as allocations outpaced redemptions to Asian-focused funds for the first time in eight quarters," said Kenneth Heinz, president of HFR, in the statement. "As investor concerns over the geopolitical tension in North Korea rises and the attention towards currency trade policies increases, funds that strategically position for these events are likely to lead Asian hedge fund industry performance in the second half of 2017."

Established in 1992, HFR is a global leader in specializing in the indexation and analysis of hedge funds. The company produces the HFRI, HFRX and HFRU Indices, industry benchmarks for global hedge fund performance, and calculates over 100 indices ranging from industry-aggregate levels down to specific, niche areas of sub-strategy and regional investment focus.

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