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Hedge Funds in Asia

Saturday, May 19, 2012

Asia Fights Back: Hedge Funds Stagnate

"Nearly all men can stand adversity, but if you want to test a man's character, give him power."

Abraham Lincoln (1809 - 1865)

Amid a backdrop of volatile global equity markets, weak U.S. employment data, a resurgence of Euro Sovereign debt risk and trading losses at JPM, the hedge fund industry as measured by the HFRX Global Hedge Fund Index posted a meagre +2.01% YTD return (through mid-May).

In comparison Asia-focused hedge fund managers appear to be fighting back. According to HSBC HedgeWeekly edition #19, the Equity-Diversified category posted a +3.93% YTD return (through May 11) led by WF Asia Fund run by Scobie Ward with +12.63%, while the biggest loser has been Nezu Cyclicals Fund Ltd with -1.01%. Those focused on Japan have produced an average of +3.51% led by SR Global Fund H - Japan with +12.86% (albeit with only $15 million in AUM) and the the worst performer being Martin Currie ARF - Japan Fund with -1.80%. Compared to terrible 2011 numbers, it appears that there has been somewhat of a rebound in 2012 although the number of managers and their respective AUM have all undergone significant shrinkage. The leading funds in terms of size in Asia continue to be Ellerton and Joho although both produced fairly lackluster 2011 returns. Living on past performance? Who knows.

What is clear is that there has been no decoupling in terms of hedge fund manager performance for those situated in Asia. On the contrary, there is a lock-step performance with their western brethren as they all suffer the wild and manic directional swings brought on by risk-on and risk-off in the current trading environment. Mahalo.