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2012 Key Trends in Asian Hedge Funds

Introduction

The Asian hedge fund industry started 2013 on much firmer ground than compared to previous years. The Eurekahedge Hedge Fund Index gained 9.79% in 2012 and total assets under management (AUM) in the industry were up during the year – currently standing at US$127.4 billion. The industry witnessed some tough times and fickle fortune since the financial crisis and over the last five years the sector has faced numerous challenges.

After growing at a tremendous pace in the 2000 to 2007 time period, the number of funds increased eightfold and total AUM grew by nearly 800% to reach US$176 billion. Asian hedge funds were faced by heavy redemptions and significant losses during the financial crisis. The Eurekahedge Asian Hedge Fund Index fell by 20.29% in 2008 and by April 2009 the AUM declined to US$104.8 billion. The industry bounced back after April 2009 with managers posting excellent performance-based returns and also attracting some asset flows. Growth in the post-2008 period has been slow and it has yet to match what was seen in the industry in the years before the crisis.

Figure 1: Industry growth since 1999
  

The Eurekahedge Asian Hedge Fund Index gained 26.46% in 2009 and 8.58% in 2010, and during this time managers also attracted some assets from investors to bring the size of the sector to US$128.6 billion by end 2010.

 

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