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Peter Douglas From Precy Dumlao, Opalesque Asia:
Japan has always generated "genuine alpha" for global investors yet allocations into Japanese hedge funds have fallen compared to other Asian countries. That was the finding of the latest research by Singapore-based hedge fund research and consultancy firm GFIA Pte Ltd., which the firm published in its May newsletter.
Peter Douglas CAIA, principal of GFIA, commented: "Global investors looking for genuine alpha from Asian markets have always been well rewarded in Japan, and as these alpha-seekers dwindle, the opportunity increases still further. Its a honeypot for alpha-seekers."
Lay Siew Ling CAIA, author of the report, added, "The continued attrition of investor capital from Japan, however, suggests that what most allocators actually want from Asia, are higher-beta strategies, not alpha."
Indeed, a review made by GFIA on the performance of Japan absolute return funds over the period (Jan 2004 Mar 2011), it was learned that Japan funds generated huge outperformance relative to the Japan market indices at equivalent or lower levels of risk.
However, the total assets under management allocated to Japanese strategies has fallen from 27% of the Asian total in 2007, to 12% in 2011, despite the market capitalization of Japan making up close to 22%1 of the total market capitalization of all stock exchanges of the countries in Asia Pacific.
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