Japanese hedge funds took a major hit last year, after investors pulled out $7.7 billion of assets. This marks the second year in a row that the Japanese hedge fund industry has posted a loss. Valued at $24 billion, it is in stark contrast to the rest of the funds in Asia, valued at over $101 billion.
"Japanese fund managers acknowledge their performance has not been very good, resulting in redemptions," said Hideki Hashiguchi of HSBC Global Fund Services Ltd.
Some blame the Tokyo Stock Exchange, which unlike most other markets, saw a drop last year of almost 13%. Other investors blame Japanese hedge fund managers, who they claim don’t know how to short effectively.
The U.S.-run Whitney & Co’s Japan Select Investors Fund lost 7.5% in 2007, while other long/short equity funds followed suit. Reps at the London-based Dejima Fund, which uses similar strategies in the Japanese equity market, said the fund was down 42%.
Goldman Sachs is among the names to recognize the red flags, prompting them to close one of their fund of funds, GS Strategic Japan Partners, who invests in Japanese funds.
The numbers are a blow to managers in Japan, who understand the desire of foreigners to diversify and invest in Asian funds. While some are responding by closing their doors, others are making a last-ditch effort by adopting new strategies or slicing their management fees down to 1.5%
Julie Scuderi
Contributing Editor for HedgeCo.Net
Email: julie@hedgeco.net
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