Some $600 billion has been ploughed into hedge funds in 2010, bringing the entire industry to around $2 trillion – and that isn’t far off pre-crisis levels.
As for the Japanese hedge fund industry, it used to have total assets of $45 billion. Now it has $14 billion.
Ed Rogers is the Tokyo-based
Rogers is adamant that the Japanese hedge fund industry is not dying. “Absolutely not, it may not be thriving right now, but hedge funds will survive if they can make money," he says.
"There are ways to make alpha in
He points out that in 2009, a handful of about 20 hedge funds pulled in the lion’s share of new allocations. He predicts there will be a greater number of investors in 2011 and that they will be amenable to making allocations beyond that top tier of global funds. The investors he is perceiving as active are
“Investors have about a zero to 3% weighting to
"Even if most investors still stick at zero, simply that wider range could result in the size of the Japanese hedge fund industry rising to $30 billion by the end of next year.”
So which funds are going to be the fortunate recipients? Rogers thinks it will be the larger funds, those of over $100 million in size currently.
However, what hope is there for the funds that aren’t that big? He sees a way.
“There is a way that a smaller Japanese hedge fund can get capital next year. They just have to perform," he suggests. "A fund that puts up a 50% return in the first half of the year is going to appear on investors’ radar because it is doing so well. That will enable it to win some of those capital allocations even if it is not large in size at present.”
Smaller Japanese hedge funds risk dying on the vine when it comes to gathering capital, but for those who are hungry to get big in 2011, they will need to run hot in the next six months.