APAC suffers hedge fund decline

InvestorsLaunchesPrime Brokerage
02 Oct, 2012

Asia-Pacific (APAC) suffered a slight slump as the number of individual managers running more than $1 billion out of the region fell raising questions about whether APAC has been oversold in recent years.

Hong Kong and Singapore suffer slight hedge fund slump

The number of managers in the so-called “Billion Dollar Club” in Hong Kong declined from 13 to 11 over the last six months, according to a survey by Hedge Fund Intelligence. Singapore now has seven managers in the “Club”, down from eight earlier in the year. Overall AuM in APAC saw a modest increase to $144 billion although a figure well below the $176 billion peak attained in 2007.

Asia ex-Japan managers have struggled since 2011, when they delivered losses of almost 17.21% whereas hedge funds on average declined 5%, according to Hedge Fund Research data.  Asia ex-Japan managers have been flat at best YTD 2012 posting modest gains of 1.19% against the industry average of 3.52%. This is leading to concerns that APAC has been a false dawn for many hedge funds and their underlying investors.

“The performance of Asian hedge funds has not been amazing. While we have seen a lot of launches, the performance has not been as strong as we would have liked. Meanwhile even some of the launches which have delivered decent returns, still struggle to raise assets until they get to a critical size. Nevertheless, Asia always seems to be a region where there is investor optimism,” said Chris Barrow, global head of sales for prime services at HSBC.

The region has also matured substantially over the last few years with more managers offering esoteric strategies as opposed to plain long/short equity. “Historically, Asia was a region dominated by long/short equity but we are seeing more managers adopting multi-strategy, credit, event-driven and macro strategies,” added Barrow.

Furthermore, a growing number of global managers are fast realising the Asian market is not one to be ignored.  The 2012 Capgemini/RBC Wealth Management World Wealth Report revealed that APAC has more high net worth individuals than North America for the first time. “A lot of US hedge funds and investors are looking at Asia with interest,” commented Barrow.

New York remains the dominant centre for hedge funds running more than $1 billion. The survey said there are 153 managers running more than $1 billion in New York, up from 139 earlier in the year. London remains relatively unchanged in the number of $1 billion + managers, although Latin America continues to see growth. There are now four managers each running more than $1 billion in Brazil. There are 364 hedge funds running more than $1 billion globally, up from 340 at the beginning of the year.

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