Asia ex-Japan hedge funds were the best performers during a month of relatively flat performance, gaining an average 1.93% in July – slightly above the benchmark MSCI Asia ex-Japan Index which was up 1.84%, according to Eurekahedge.
However, the standouts in the region were Japan managers, which were up 18.4% in the first seven months of the year, buoyed by Abenomics-fuelled market liquidity. They managed to squeeze out a small gain of 0.93% in July, beating the Topix, which fell -0.19% amid a month of disappointing financial results from Japanese listed companies.
Managers in other regions had relatively flat positive gains last month, although they are an improvement from mostly negative returns in June. North American hedge funds were up 1.4%, while Europe gained 1.3% and Latin American funds 0.4%.
Event-driven strategies were the best performers among Asia ex-Japan managers, gaining 2.7% in July due to a pick-up in corporate activity in the region, particularly in Southeast Asia.
By comparison, Japan event-driven funds were down -0.2% last month, but were still up 21.8% for the first seven months of the year.
Capital inflows continue to be concentrated in North America, which attracted $1.8 billion in positive asset flows last month, with an additional $6.6 billion coming from performance gains. The region now has $1.29 trillion in assets.
Asia saw negative net capital flows in July of $100 million, although this was somewhat offset by $700 million in net growth from fund performance, bringing total industry assets in the region to $124 billion.
While Asia still has a way to go before it matches its peak industry AUM of about $176 billion in 2007, North America has matched its mid-2008 asset peak of $1.2 trillion, with strong performance gains triggered by US bull markets this year helping to boost industry AUM.
Eurekahedge notes that North America-focused funds posted the highest annualised returns of all regions over a five-year period, at 7.67%, besting Asia Pacific (5.4%), emerging markets (4.7%), global-focused (4.4%), Latin America (4.2%) and Europe (-0.89%).