No Hemorrage From Japan Long/Short Equity...Yet
"I believe that crisis really tends to help develop the character of an organization."
John Sculley, former president of Apple Computer Inc.
While poor performance continues to hang over Japan Long/Short Equity managers like a bad cold that has been hard to shake off (even after 18 months), it is interesting to see if anecdotal evidence suggests the beginning of a run for the exits as it relates to Japan. And if so, where is the money going?
First, an update on hedge fund performance. Out of a sample of 34 funds (randomly selected) from a well-known Swiss bank list, their YTD net of fee return average performance stood at -0.91% through the first week of May 2007. This compares to a positive 1.90% return YTD in the Nikkei 225 Index. So the absolute return argument for Japan Long/Short funds on average remains a little tricky.
Second, assets. For the same 34 funds, combined AUM came in at US$13.6 billion. This compares to US$13.9 billion back in February, or a fall off of 2%. Certainly nothing that could necessarily be considered a major change in investor flows.
Composition of flows. Within the Japan Long/Short Equity fund mix was has been interesting have been early signs of a shift which are not related to performance moves alone. The biggest gainers in absolute dollar terms have been Arcus, DB Equilibria Japan Fund, Joho and Platinum Japan. The thread which appears here suggests money going into unique and long term stock pickers that have company specific skills or a markete neutral approach or a broader regional investment philosophy. In terms of losers, funds that have suffered steeper than usual outflows include: Asuka Japanese Equity Long/Short Trust, Boyer Allan Japan Fund, Melchoir Japan and to a lesser extent Whitney New Japan Investors Ltd. Perhaps a broad theme there tends to be that these funds have been relatively poor performers over the last 6-12 months.
Of course this is just a small sample and one should be wary of making generalizations. But that said, a pattern may be slowing appearing and current investors (long term institutional) and short term FOHF would be wise to monitor the situation in coming months. Remember that after the summer a number of investors start to make serious allocation decisions as performance heads into the final stretch of the calendar year.
Mahalo.
"I believe that crisis really tends to help develop the character of an organization."
John Sculley, former president of Apple Computer Inc.
While poor performance continues to hang over Japan Long/Short Equity managers like a bad cold that has been hard to shake off (even after 18 months), it is interesting to see if anecdotal evidence suggests the beginning of a run for the exits as it relates to Japan. And if so, where is the money going?
First, an update on hedge fund performance. Out of a sample of 34 funds (randomly selected) from a well-known Swiss bank list, their YTD net of fee return average performance stood at -0.91% through the first week of May 2007. This compares to a positive 1.90% return YTD in the Nikkei 225 Index. So the absolute return argument for Japan Long/Short funds on average remains a little tricky.
Second, assets. For the same 34 funds, combined AUM came in at US$13.6 billion. This compares to US$13.9 billion back in February, or a fall off of 2%. Certainly nothing that could necessarily be considered a major change in investor flows.
Composition of flows. Within the Japan Long/Short Equity fund mix was has been interesting have been early signs of a shift which are not related to performance moves alone. The biggest gainers in absolute dollar terms have been Arcus, DB Equilibria Japan Fund, Joho and Platinum Japan. The thread which appears here suggests money going into unique and long term stock pickers that have company specific skills or a markete neutral approach or a broader regional investment philosophy. In terms of losers, funds that have suffered steeper than usual outflows include: Asuka Japanese Equity Long/Short Trust, Boyer Allan Japan Fund, Melchoir Japan and to a lesser extent Whitney New Japan Investors Ltd. Perhaps a broad theme there tends to be that these funds have been relatively poor performers over the last 6-12 months.
Of course this is just a small sample and one should be wary of making generalizations. But that said, a pattern may be slowing appearing and current investors (long term institutional) and short term FOHF would be wise to monitor the situation in coming months. Remember that after the summer a number of investors start to make serious allocation decisions as performance heads into the final stretch of the calendar year.
Mahalo.
posted by Franklin Scruggins | 1:08 PM
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