Investment in Asian hedge funds surged to pre-economic collapse highs in the third quarter, boosted by efforts to jolt Japan’s economy out of a decades-old slump.
Total capital invested in Asian hedge funds surged to $108 bn in the quarter, surpassing the $100 bn mark for the first time since the global financial crisis collapsed markets worldwide in 2008, according to industry analysis and consulting firm Hedge Fund Research (HFR).
New investment in Asian hedge funds rose for a fourth straight quarter as investors committed $1.9 bn in net new capital, HFR says. The investment brings to $7.3 bn the net amount of new capital that has entered Asian hedge funds in the last four quarters.
HFR attributes the surge to the economic policies – or ‘Abenomics’ – of Japanese Prime Minister Shinzo Abe, who is seeking to revive the economy by weakening the yen, targeting 2 percent annual inflation, promoting quantitative easing and increasing public investment.
‘Abenomics has significantly and fundamentally changed the investment landscape not only for Japan, but also for broader Asian, emerging and developed global markets, contributing to record performance gains in Japan and unprecedented opportunities for Asian hedge fund strategies,’ says Kenneth Heinz, president of HFR, in a press release. ‘Expectations for expansion of currency, equity and fixed-income volatility, as well as the effects of these active monetary policy measures on trade balances and capital flows, have attracted global capital to Asian hedge funds.’
The HFRX Japan Index, which measures performance of hedge funds focused on Japan, gained a total of 23.2 percent in the first three quarters of this year, leading all other regional indices, HFR says. The broader HFRX Asia Equally Weighted Index gained 11.8 percent at the same time while the global HFRX Global Hedge Fund Index increased by 5 percent.
While Japanese economic policy has fueled gains in the hedge fund industry this year, most new hedge funds have opened in China, which, including Hong Kong, now serves as headquarters for 31 percent of all hedge funds focused on Asia. Singapore is the base for 12.3 percent and Japan is home to 4.6 percent, HFR says.
