Asia ex-Japan hedge fund managers outperformed their peers on a global basis last month – helped by a 14% average gain among event-driven strategies. That reverses a trend from last year when regional returns fell below those of funds overseas, finds data provider Eurekahedge.
Last month, Asia ex-Japan hedge funds had an average return of 4.32%, nearly double the 2.2% by their European counterparts and outstripping the 1.7% for the US. In the first two months of 2012, Asian funds had gained 8.79%, ahead of Europe (5%) and the US (4%).
That contrasts with overall comparative performance in 2011, when volatile markets led to losses in every region. Asian funds were impacted severely – down by an average of -12.61%, compared with the negative returns of -0.6% in North America and -6.42% in Europe.
Asia ex-Japan funds saw a collective net inflow of $300 million in February – a relatively small share of an $11.2 billion rise in assets by the industry on a global basis, bringing total AUM to $111.5 billion for Asia and $1.75 trillion for the world. Eurekahedge attributes the Asian inflows to investors seeking exposure to fast-growing emerging markets, despite the risks.
By contrast, US hedge funds saw outflows of $1.3 billion last month as various large firms suffered significant redemptions. The main reasons, according to Eurekahedge, are that investors are taking profits on their initial allocations, or are shifting money to stronger-performing funds after withdrawing from strategies with low or negative performance figures.
Asian managers delivered strong gains across all hedge fund strategies, outperforming their overseas counterparts in every category. Event-driven funds in the region brought in last month’s biggest average returns at 13.99%, fuelled by corporate events such as M&A deals.
Other Asian strategies brought in gains of between 1.8% and just over 4%. Asia ex-Japan long/short equity hedge funds – the prevalent strategy in the region, accounting for about one-third of the sector – had average gains of 4.29% in February, thanks to bullish equity markets and currency gains, says Eurekahedge.
Various industry forecasts put the size of the Asian hedge fund assets under management at between $140 billion and $150 billion by year-end – still below the 2007 peak of $176 billion – with allocations expected to come largely from US institutional investors seeking to benefit from Asian growth.