The strong performance of emerging markets, especially China and India, has led to a pick-up in interest, say industry experts. But don't expect a fully fledged comeback just yet.
Amid 18 months of poor performance, China-focused strategies have suffered heavy outflows and will likely continue to see low demand this year, says eVestment's head of research.
Barriers to entry and failure rates have been rising in the "ridiculously concentrated" hedge fund sector, but Greater China managers are a bright spot, says Jo Murphy, Asia-Pacific MD of CAIA.
Asia-focused hedge funds – especially India and Japan strategies – continued their heavy slide last month, while emerging-market and global mandates made slight gains.
Systematic risk has abated leading to a hedge fund investment trend towards markets being driven by stock picking.
Japan-focused hedge funds have suffered from disappointing inflows recently, new data shows, but long-only investors are still confident about the country's equity prospects.