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Net allocations to Asia-only strategies also decreased in the first three months of the year, although net allocations to global emerging-market strategies, which include Asian markets, increased by $1 billion.
On a global basis, the hedge-fund industry attracted a net of $16.5 billion in the first quarter (versus receiving $194 billion throughout 2007), with total capital under management virtually flat over the quarter at $1.9 trillion. Assets in funds of hedge funds also remained nearly unchanged at just over $800 billion û the slightest increase in the industry since it experienced net redemptions in late 2005.
Asian strategies make up 14% of the number of hedge funds worldwide, but account for just 5.3% of capital. This reflects the relative youth of the industry, the fact that the regionÆs capital markets are still maturing, and the continuing dominance in the region of a single strategy û equity long/short.
Emerging market and Asia arbitrage strategies received the most inflows, while net outflows hit equity hedge strategies û in direct contrast to the flows experienced among strategies primarily investing in developed markets.
According to HFR, the weakest area of hedge-fund performance in the past quarter was in emerging Asia, with its Asia ex-Japan Index falling nearly 14%. This is the first such negative period for the asset class since it reached significant size, as the index had produced nearly 22% annualized performance since 2002.
Of the hedge funds included in HFRÆs universe, 24.6% are in the United States, 23.6% in the United Kingdom, 13.4% in Hong Kong and 12.5% in Singapore. Equity hedge strategies account for 77% of these funds, and 65% of Asia-focused capital, with relative value a distant second.
Japan-only funds account for 32% of the number of funds but only 27% of assets under management. Asia ex-Japan funds have a similar story: 45% of the number of funds but only 39% of the capital. Asia plus-Japan funds are the fewest, only 23% of the fund universe, but employ 35% of the assets.
The AU$85 billion ($61.6 billion) Australian super fund has some exposure to indebted property developer Evergrande. Meanwhile, China’s construction finance is part of its core strategy in real estate.
Investors are seeing the risks, but also the opportunities of the logistics sector. Warehousing their fears for the moment, they can see it's a good conduit to high-growth assets.
Insto roundup: GPIF staff say J-Reits more attractive than traditional assets; Hong Kong's strict Spac criteria
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SGX’s new framework for Spacs will likely provide investors with a much-needed channel for direct deals, but the verdict is still out on whether it will bring liquidity to the bourse.