Research

2015 Key Trends in Asian Hedge Funds

Introduction

The Asian hedge fund industry grew steadily in 2015 with the asset base growing at twice the rate seen over the same period last year. With strong investor inflows during the year, total assets under management (AUM) increased by US$16.1 billion in July year-to-date, bringing the total size of the Asian hedge fund industry to US$177 billion managed by 1,413 hedge funds.

The Asian hedge fund industry witnessed tremendous growth from US$14 billion as at end-1999 to US$176 billion over the next eight years by end-2007. As at end-2007, the total fund population in the region stood at 1,237 funds up from 145 funds in 1999. Gains realised over this period were partially reversed by the advent of the global financial crisis which saw the Eurekahedge Asia Hedge Fund Index decline by 20.48% in 2008, resulting 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 US$104.8 billion low before witnessing a rebound amid rallying equity markets and some positive asset flows in the second half of 2009. Continuing its upward trajectory in 2010, the industry realised strong performance-based growth as the Eurekahedge Asian Hedge Fund Index gained 9.17% during the year.

Figure 1a: Industry growth since 1999
 

Hedge funds shed some of their earlier gains in 2011 as the world braced for the Eurozone sovereign debt crisis, resulting in performance-based losses of US$6.7 billion for fund managers alone. While 2012 saw Asian managers post a mild recovery in terms of performance, net asset flows were in the red with the industry losing US$4.4 billion through redemptions.

 

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