Fri, Jun 23, 2017
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Asian hedge fund industry contracts 5% in 1H 2011 to total assets of $145bn

Tuesday, September 27, 2011
Opalesque Industry Update - The AsiaHedge Asset Survey for 1H2011 shows that the Asian hedge fund industry shrank slightly in the first half of the year to total assets of $145 billion, as compared to $152 billion at the end of 2010. This reflects a 5% decline in the industry assets and a reversal of the robust recovery seen since the severe financial crisis of 2008, primarily due to strong macro headwinds and weak markets.

“While Asian hedge fund managers showed remarkable resilience and downward protection through a turbulent first half of the year, defensive portfolios unfortunately clipped returns and investors started applying the brakes to capital re-allocations they had begun to make to the region barely a year ago,” says Aradhna Dayal, editor of AsiaHedge in Hong Kong. “We need to remember though that at $145 billon, industry assets are still up 5% as compared to one year previously, and a recovery in sentiment and markets could well re-ignite the positive trend.”

The positive news, however, is that redemptions this time have been fund-specific and not the sort of large-scale, industry-wide redemptions as seen in 2008. “Asian hedge funds have strategically reworked their investor base over the past three years and the presence of much more institutional, long-term capital this time round has been the single largest factor working in favour of the industry,” says Dayal.

Interestingly, Asia-based managers now run US$109 billion or a record 76% of the industry assets. “Several factors are propelling this trend. These include the growing AUM’s of the increasing number of locally-managed spin-offs and established big boys in Asia, as well as an increasingly serious commitment by global hedge funds to their Asian offices,” notes Dayal.

Hong Kong consolidated its position as the largest centre for the management of Asian hedge fund assets with a nearly 27% of the market share—a reflection of its status as the international hub for the CNH (offshore Renminbi) market, a well regulated destination with few shorting restrictions and smooth access to the region’s top talent as well as China opportunities.

Meanwhile, Asia ex Japan equity hedge fund strategies emerged as the largest fund category in Asia in 1H2011, with US$28 billion in assets.

Looking forward, AsiaHedge sees a relatively tough second half for the Asian hedge fund industry, with managers needing to bring back the performance to keep investors committed. “We expect capital inflows to remain tepid in the coming months, but believe that a speedy resolution of the issues in Europe and the US will prompt investors to deploy their heavy cash reserves and re-accelerate the industry growth,” says Dayal. “Sustainability of businesses, institutionalisation and adaptation to new regulatory regimes will emerge as key concerns for managers.” Corporate website: Source

- FG

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Comment: For emerging market debt, a sustainable recovery[more]

    Matthias Knab, Opalesque: Standish Mellon Asset Management Company writes on Harvest Exchange: After several difficult years, the outlook for emerging market debt (EMD) denomin

  2. J.P. Morgan Global Alternatives raises distressed shipping fund[more]

    From Institutionalinvestor.com: J.P. Morgan Global Alternatives has closed a $480 million fund to invest in distressed shipping assets, attracting capital from pensions, endowments and insurance companies. The firm, which has been investing in maritime for more than a decade, initially targeted $400

  3. FinTech - Rise of robots: Inside the world's fastest growing hedge funds[more]

    From Bloomberg.com: Believe the hype. Quants have never been more popular. After doubling over the past decade, assets run by so-called systematic funds have hit a record $500 billion this year, according to estimates from Barclays Plc. In some ways, their meteoric rise is due to the same technolog

  4. Legal - Bond market concerns could scuttle Paulson's Fannie-Freddie plan[more]

    From Bloomberg.com: A hedge fund proposal for freeing Fannie Mae and Freddie Mac from U.S. control is poised to face stiff opposition from investors who say it risks wrecking the mortgage-bond market. The Moelis & Co. blueprint, which firms including Paulson & Co. and Blackstone Group LP sponsored,

  5. Other Voices: Are your pricing policies and procedures for less liquid instruments adequate?[more]

    Komfie Manalo, Opalesque Asia: The unrelated position mismarking incidents that quickly precipitated the closures of both Visium Asset Management and Marinus Capital have been recent focal points for market participants, but regulatory scrutiny of valuation choices for less liquid instruments is