Research

2013 Key Trends in Asian Hedge Funds

Introduction

Against the backdrop of an increasingly uncertain regional macroeconomic situation, the Asian hedge fund industry has shown remarkable resilience in 2013. The Eurekahedge Asia Hedge Fund Index is up 7.77% July year-to-date, with the total assets under management (AUM) of the industry currently standing at US$ 139.0 billion managed by a population of 1303 hedge funds.

 

The size of the industry stood at US$14 billion as at end-1999 and over the next eight years it grew to US$176 billion by end of 2007 – a period which saw strong growth in the number of fund managers setting up shop in Asia. As at end of 2007, the total fund population in the region stood at 1237 funds up from 145 funds in 1999. Some of the gains were reversed by the advent of the financial crisis which saw the Eurekahedge Asia Hedge Fund Index decline 20.27% in 2008 and also ushered in a spate of fund liquidations as managers struggled to deal with negative returns and redemption requests from investors. The industry bottomed out in April-2009 with AUM declining to a low of US$104.8 billion before witnessing a rebound of sorts amid rallying equity markets and some positive asset flows in the second half of 2009.

As illustrated in Figure 1b, the industry rebounded on the back of strong performance-based gains and asset flows in the in 2010 and the first half of 2011. The Eurekahedge Asian Hedge Fund Index was up 8.97% in 2010. In 2011 the sector witnessed some declines through performance while asset flows were flat for the year. During this time the European debt crisis and concerns over the global economy led to a difficult investment climate with high volatility and sudden trend reversals in the markets – leading to losses and risk-averse investor sentiment. The second half of 2011 saw the industry shed US$6.4 billion through performance-based losses.

Figure 1: Industry growth since 1999
  

 

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