Key Takeaways
- • Value Partners overtook Sparx Group to claim the No. 1 spot in Institutional Investor's 2010 Asia Hedge Fund 25, with assets under management nearly doubling since April 2009 to $5.7 billion, driven mainly by performance rather than inflows.
- • Asian hedge funds managed $36.1 billion as of April 1, 2010, up 19.9% year over year, yet saw $700 million in net redemptions in Q1 2010 according to Hedge Fund Research.
- • The HFRX Asia composite index rose 16.8% in 2009 versus 20% for the HFRI composite, showing Asian funds lagged global peers even as they outperformed developed equity markets in the first five months of 2010.
- • Beijing's approval of stock index futures, short-selling and margin trading is seen by managers such as Pacific Alliance's Chris Gradel as opening a major opportunity in the A-share market.
- • Industry consolidation is under way, with several smaller firms dropping off the list while larger managers grew or held their ground, according to Blackstone Alternative Asset Management.
Summary
Value Partners, the Hong Kong-based hedge fund firm, took the No. 1 position in Institutional Investor's Asia Hedge Fund 25 ranking after three years at No. 2. The firm's assets under management have almost doubled since April 2009 to $5.7 billion. Its flagship $812 million Classic Fund gained 82.9% in 2009, and its $127 million Chinese Mainland Focus Fund gained 86%, far outpacing the Hang Seng index's 52% rise. Deputy CIO Louis So said the growth came mainly from performance, with minimal net subscriptions. The firm uses a contrarian, bottom-up long-short equity approach focused on Greater China, and its 23-member team made 2,500 company visits in 2009. Through May 2010, its Classic and Chinese Mainland Focus funds were flat for the year as the Shanghai Composite fell more than 20%, and the firm has built cash while looking for bargains.
Across the list, the 25 firms managed $36.1 billion as of April 1, up 19.9% from a year earlier. Hedge Fund Research reported $700 million in net redemptions from Asian-focused funds in the first quarter of 2010, while the global hedge fund industry took in $13.7 billion. Blackstone Alternative Asset Management's Ted Lee, who oversees $28.6 billion in funds of hedge funds, said Asian managers are consolidating: capacity-constrained firms closed to new money while smaller players struggled to attract capital. Sail Advisors CEO Vincent Duhamel, whose firm oversees $2.2 billion, said some large Asian funds shrank from $500 million to $50 million within six months.
Asian hedge funds lagged global peers in 2009. The HFRX Asia index rose 16.8%, versus 20% for the HFRI composite, and neither index exceeded 1% through May 2010. Japan was a relative bright spot, with the HFRX Japan index up 5% in 2010 through May. Sparx Group, Tokyo-based and previously No. 1 for four years, fell to No. 2. Arisaig Partners of Singapore rose to No. 3, Beijing-based Hillhouse Capital Management debuted at No. 4 with $2.5 billion, and Tokyo-based Bayview Asset Management, with $2.1 billion, ranked No. 5. Duhamel expects European and North American institutions to begin allocating to Asian hedge funds around year-end, while Lee expects Asia to become a larger force in the global industry as hedging tools and counterparties mature.
Across the list, the 25 firms managed $36.1 billion as of April 1, up 19.9% from a year earlier. Hedge Fund Research reported $700 million in net redemptions from Asian-focused funds in the first quarter of 2010, while the global hedge fund industry took in $13.7 billion. Blackstone Alternative Asset Management's Ted Lee, who oversees $28.6 billion in funds of hedge funds, said Asian managers are consolidating: capacity-constrained firms closed to new money while smaller players struggled to attract capital. Sail Advisors CEO Vincent Duhamel, whose firm oversees $2.2 billion, said some large Asian funds shrank from $500 million to $50 million within six months.
Asian hedge funds lagged global peers in 2009. The HFRX Asia index rose 16.8%, versus 20% for the HFRI composite, and neither index exceeded 1% through May 2010. Japan was a relative bright spot, with the HFRX Japan index up 5% in 2010 through May. Sparx Group, Tokyo-based and previously No. 1 for four years, fell to No. 2. Arisaig Partners of Singapore rose to No. 3, Beijing-based Hillhouse Capital Management debuted at No. 4 with $2.5 billion, and Tokyo-based Bayview Asset Management, with $2.1 billion, ranked No. 5. Duhamel expects European and North American institutions to begin allocating to Asian hedge funds around year-end, while Lee expects Asia to become a larger force in the global industry as hedging tools and counterparties mature.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.