Allocations Flee Japan Following Poor Returns
"Creation of wealth is almost a duty because of the widespread benefits that flow from it."
John Gunn, Chief executive, British & Commonwealth plc
Follow the Money. Latest numbers extracted from over 100 hedge funds allocating to Asia (including Japan) and based upon HSBC Private Banking and Banque Syz have been eye opening. Plagued by poor performance the last 18 months, many long-short equity managers specializing in Japan have lost assets - either from poor performance as well as from investor redemptions.
First the big picture: Japan lost US$1.6 billion YTD through mid-July 2007; Asia (excluding Japan) gained US$1.3 billion; and, Asia multi-strategy gained US$800 million.
Second, the winners and losers: Highbridge Asia gained over US$450 million, followed by Artradis Baracuda with US$300 million; in Asia diversified equity manager Joho gained over US$400 million; Arnott Opportunities gained US$300 million; MW Tops gained US$300 million; Penta Japan gained US$240 million; and, SR Global gained over US$234 million in assets. Melchoir Japan lost close to US$500 million; Whitney New Japan Investors lost US$400 million; and, Moon Light 04 lost close to US$300 million; Odey Japan lost US$240 million; and, Myojo lost close to US$150 million.
Third, implications: it looks like the big performers of 2005 have been the biggest losers so far in 2007. This clearly raises the question as to whether there are, among other things, size issues related to Japan long/short equity.
Moreover, the latest data would probably also support the fact that emerging Japan long/short managers are going to find it very tough to raise capital and at the very least hit the US$50 million "business sustainability" mark. Not surprisingly, one can expect more outflows and potentially more shut-downs in the Japan long/short equity space. Finally, the clear asset raising advantage of pan-Asia long/short equity plus the growth of Asia multi-strategy is likely to influence the business growth of hedge funds in the region. For example, it might make good business sense to have a more pan-Asian perspective to long/short equity rather than a simple country only perspective.
This is likely to be the case with a number of Japan managers. It might also prove to be one way that they build up operationally in Singapore, Hong Kong or even Hawaii rather than simply in Tokyo. For now at least, Korea, China and India seem to be the big asset gainers while Japan is emerging as the allocation loser.
The foregoing raises important questions regarding the future development of the hedge fund industry in Japan.
Mahalo!
"Creation of wealth is almost a duty because of the widespread benefits that flow from it."
John Gunn, Chief executive, British & Commonwealth plc
Follow the Money. Latest numbers extracted from over 100 hedge funds allocating to Asia (including Japan) and based upon HSBC Private Banking and Banque Syz have been eye opening. Plagued by poor performance the last 18 months, many long-short equity managers specializing in Japan have lost assets - either from poor performance as well as from investor redemptions.
First the big picture: Japan lost US$1.6 billion YTD through mid-July 2007; Asia (excluding Japan) gained US$1.3 billion; and, Asia multi-strategy gained US$800 million.
Second, the winners and losers: Highbridge Asia gained over US$450 million, followed by Artradis Baracuda with US$300 million; in Asia diversified equity manager Joho gained over US$400 million; Arnott Opportunities gained US$300 million; MW Tops gained US$300 million; Penta Japan gained US$240 million; and, SR Global gained over US$234 million in assets. Melchoir Japan lost close to US$500 million; Whitney New Japan Investors lost US$400 million; and, Moon Light 04 lost close to US$300 million; Odey Japan lost US$240 million; and, Myojo lost close to US$150 million.
Third, implications: it looks like the big performers of 2005 have been the biggest losers so far in 2007. This clearly raises the question as to whether there are, among other things, size issues related to Japan long/short equity.
Moreover, the latest data would probably also support the fact that emerging Japan long/short managers are going to find it very tough to raise capital and at the very least hit the US$50 million "business sustainability" mark. Not surprisingly, one can expect more outflows and potentially more shut-downs in the Japan long/short equity space. Finally, the clear asset raising advantage of pan-Asia long/short equity plus the growth of Asia multi-strategy is likely to influence the business growth of hedge funds in the region. For example, it might make good business sense to have a more pan-Asian perspective to long/short equity rather than a simple country only perspective.
This is likely to be the case with a number of Japan managers. It might also prove to be one way that they build up operationally in Singapore, Hong Kong or even Hawaii rather than simply in Tokyo. For now at least, Korea, China and India seem to be the big asset gainers while Japan is emerging as the allocation loser.
The foregoing raises important questions regarding the future development of the hedge fund industry in Japan.
Mahalo!
posted by Franklin Scruggins | 9:24 AM
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