Mon, Nov 30, 2015
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. Other Voices: Hedge fund marketing and the selling cycle[more]

    By Bruce Frumerman. How long is the selling cycle now? That’s a question my financial communications and sales marketing consulting firm has been asked on a regular basis by hedge fund firm owners and sales people, ever since we opened the doors to our firm in 1987 pre-crash. Wa

  2. People - Solus Alternative Asset Management adds chief strategist from BTIG[more]

    From Daniel Greenhaus joined hedge fund manager Solus Alternative Asset Management as managing director and chief strategist. He will work closely with Chris Bondy, Solus’ chief economist, managing director and executive vice president, said Chris Pucillo, CEO and chief investmen

  3. Opalesque Roundtable: Seeding deal terms can be onerous for hedge funds[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: Executives from fund of funds firms, family offices, a placement agent, a private equity firm, and an accounting firm gathered in Connecticut last month for the

  4. Opalesque Roundtable: Family offices flock to co-investment[more]

    Bailey McCann, Opalesque New York: Co-investments have been a hot topic for pension funds in recent years, as they try to move away from high fees and improve transparency. But now, family offices are more readily getting into the mix and establishing in-house deal teams, according to the delega

  5. More institutional investors invest in CTAs compared to last year despite dissatisfaction with performance[more]

    Benedicte Gravrand, Opalesque Geneva: "Despite a strong start to 2015 for CTAs in Q1, commodity market conditions have made return generation difficult for fund managers over much of the rest of the year to date," says Preqin’s November