Asian hedge fund managers have seen their slice of global AUM get smaller since the industry’s peak in mid-2008, as their US counterparts' share of assets continues to grow, according to data provider Eurekahedge.
As of May 2012, Asia ex-Japan hedge funds accounted for 6% of the $1.74 trillion in global hedge fund assets, down from 8% at the industry’s peak in mid-2008. During the same period, US managers have seen their proportion rise to 69% from 64%.
European hedge funds also saw their proportion decrease from 24% to 21% within the same timeframe, while managers in Japan and Latin America maintained their respective shares of 1% and 3% over the past four years.
US hedge funds have a geographical advantage, as a large pool of hedge fund investors – such as family offices, pension funds and high-net-worth individuals – are located stateside, says the report. They have also outperformed their peers in Europe, accounting for the decrease in assets in that region.
On the bright side, Eurekahedge notes that managers in Asia-Pacific, including Japan, have seen nearly $1 billion of net asset flows in the past six months “as investors continue to look to the region to deliver growth”.
Nonetheless, total Asia ex-Japan hedge fund assets stood at $110.6 billion at the end of June, down about $100 million from the previous month. Although $270 million flowed into the sector during June, negative average manager returns of -0.23% wiped out $400 million in AUM.
Asia ex-Japan was the only region to register a performance loss last month, which Eurekahedge attributed to “broad declines across regional markets, especially China”.
Other regions made small performance gains in June. Japanese managers turned in the best performance, registering an average yield of 1.75% followed by US hedge funds with 0.76%.
The best-performing Asian strategy last month, with a 3.18% gain, was relative value, which generates returns from mispricing between securities or other instruments that normally trade at similar values.
Event-driven funds had the region’s lowest returns in June, with a negative performance of about -1.2%. Even so, event-driven managers in Asia ex-Japan have turned in the highest gains in the year to June, with 11.64%, making them “by far the best performing regional mandate”, says Eurekahedge.
It credits the yields to the healthy volume of announced cross-border deals by Asia-Pacific companies in the first half of 2012.