A recent asset survey by AsiaHedge reveals that industry assets for Asian hedge funds remained mostly static in the first half of 2010 at $137.75 billion, a marginal 3.9% increase over the $132.48 billion recorded at end 2009.
“The numbers very much confirm our belief that the nascent recovery seen in Asian hedge fund assets towards the end of last year has been stalled due to weak capital inflows, continued redemptions and largely flat performance of the funds in first half 2010,” says Aradhna Dayal, Editor of AsiaHedge in Hong Kong. “What has firmly become entrenched is the fact that assets are moving East. Asia-based managers now run $97.49 billion or 70.77% of the total industry assets with managers in the UK and US at $40.26 billion in assets.”
The top 10 funds by assets size for 2010 are somewhat similar to last years’ list with large institutional players dominating. Some new names that now appear in that list are Hillhouse, BroadPeak and Sloane Robinson. Other funds on this year’s list are Taiyo Pacific Partners, Penta and Brevan Howard.
The survey also revealed that Asia excluding Japan emerged as the largest strategy in the region. This strategy is well ahead of Japanese equities and Asia including Japan strategies which are historically the largest. “The major reason for this change was a clear shift in investor interest towards pan-Asian rather than country specific strategies this year,” explains Dayal.
Interestingly, AsiaHedge reported that Indian funds saw the biggest percentage jump in assets, growing 67.15% to reach a total of $3.93 billion in the first half of 2010. This growth was fueled by a combination of a rebound in the Indian stock market as well as a rebalancing of portfolios by global investors that have been significantly underweight in this emerging powerhouse.
Finally, AsiaHedge predicts a difficult environment continuing for the Asian hedge fund managers. “It will be a slow crawl back up for Asian managers, combined with at least one more major round of consolidation,” says Dayal. “The good news is that investors now find Asian hedge fund managers, and the operations they have been built out, world-class and are probably just waiting for the right climate to restart the allocation engine,” she adds.
Editing by Alex Akesson
