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GFIA: Mid-sized Asian hedge funds outperform both on absolute and risk adjusted basis

Thursday, August 01, 2013

Komfie Manalo, Opalesque Asia:

Mid-size Asian hedge funds, particularly those running assets of between $75m and $150m, outperformed both absolute and risk adjusted basis, said Singapore-based hedge fund data provider GFIA in its July Insights report.

Peter Douglas, GFIA founder, writes, "Mid-sized funds tend to experience lower volatilities than smaller and larger funds in terms of both returns and asset flows. Larger funds, on the other hand, could find it more challenging to maneuver their portfolios in Asia markets and tend to see greater fluctuation of capital flows which probably contributed to the less optimal returns reported. The sweet spot also depends on the strategy and the market that the fund invests in, and although there is no one consistent sweet spot across all strategies, generally running a mid-sized fund seems to be the more viable strategy in Asia."

GFIA studied data from 507 funds from AsiaHedge and Eurekahedge that have track records spanning the period from Jan 2009 to May 2013. Among their findings, they found that smaller funds with less than $50m in assets, outperformed on an absolute return basis across all strategies. While the correlations for very large funds to market indices and hedge fund peers were generally low, the smallest funds tended to have the highest correlations to indices.

The report noted that smaller funds saw a much more volatile cumulative return curve than ......................

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