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For the full year, the Asian hedge fund industry posted an increase in capital of $7.4 billion on global inflows of $3.8 billion, this compared to a capital increase of $24 billion on $10.5 billion inflow in 2013.

Asian hedge fund performance was led by the volatile HFRI EM: India Index, which gained +5.4 percent for 4Q14 and an impressive +44.4 percent for 2014, leading all regional indices globally. The gain for the HFRI EM: India Index was the second highest since inception (’09: +56.2%) and topped Indian equities by over 1,400 basis points.

The HFRI EM: China Index also posted a strong increase of +4.6 percent in 4Q, completing a gain of +5.7 percent for 2014, which trailed strong gains of Chinese equities in both 4Q and FY14. The HFRX Japan Index gained +5.2 percent for 2014, narrowly trailing the gain of Japanese equities.

Investor capital inflows in Asian hedge funds for both 4Q and 2014 were led by Equity Hedge strategies, which received inflows of $1.2 billion in 4Q and $2.1 billion for FY 2014. However, Event Driven hedge funds located in Asia, which execute in Distressed and Shareholder Activist strategies, led the performance by strategy with these posting a gain of +11.5 percent for 2014, topping the muted gain of one percent for the HFRI Event Driven Index.

Asian-located Macro hedge funds, which actively invest across currency, commodity, fixed income and equity markets returned +5.5 percent for 2014, in line with full year gain for the HFRI Macro Index. Capital flows by region in 4Q were led by Japanese focused funds, with inflows of $960 million; for FY 2014, Asian inflows were led by funds focused on Emerging Asia, with inflows of $3.45 billion for 2014.

“Asian hedge funds were well-positioned for the global currency and commodity markets dislocations of the past few months, while at the same time, Asian hedge funds have also been the beneficiaries of a strong relative performance and positive decoupling of regional equity markets, both of which have contributed to Asian hedge fund gains in recent months,” stated Kenneth J. Heinz, President of HFR. “As the composition of the Asian hedge fund industry continues its powerful evolution toward that of the global industry, hedge funds are increasingly using innovative strategies to access opportunities created by increased financial market globalization and integration. Asian hedge funds executing on these sophisticated strategies are likely to drive strong and continued expansion of the Asian hedge fund industry in 2015.”

www.hedgefundresearch.com

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