Hedge funds increasingly choosing headquarters in Asia, led by funds in China, according to HFR
The number of hedge funds focusing investments on Asia rose in the second quarter of 2012, exceeding the record number set in 2007, even as the value of investments declined, according to hedge fund analysis and indexation firm Hedge Fund Research (HFR).
The number of hedge funds dedicated to Asian investment increased to 1,117 in the second quarter, rising from 1,101 at the end of the first quarter and beating the record number of 1,107 set in the fourth quarter of 2007, according to a press release from HFR.
Asia-focused funds at the end of the quarter accounted for almost 15 percent of the global total of hedge funds.
‘The Asian hedge fund industry is rapidly developing in sophistication, breadth, depth and global reach, with funds implementing dynamic commodities and currency-based strategies across local regions, including mainland China,’ says Kenneth Heinz, HFR’s president.
‘These innovative Asian hedge funds are likely to provide global performance leadership and attract capital from US, European and emerging markets investors seeking new growth opportunities in coming quarters.’
HFR says the number of Asia-focused hedge funds with headquarters in Asia also continued to climb in the second quarter, with an increase in funds headquartered in China, Japan and Australia.
By the first quarter of 2012, China was leading Asia in the number of hedge funds headquartered there, with a total of 30 percent, an increase of 20 percent on three years earlier.
China was the fourth-most common headquarters for hedge funds worldwide, after the US, the UK and Switzerland, HFR says.
The growth in the number of hedge funds focused on investing in Asia comes despite losses for funds across the region, according to indexes compiled by HFR.
The total value of funds focused on Asia dropped to $83.3 bn in the second quarter, HFR says. This marks a decline of $3.3 bn, compared with an increase of $4.5 bn in the first quarter.
Even amid the losses and overall decline in value, the Asia-focused hedge funds attracted a net inflow of $88 mn in new capital in the second quarter after a net inflow of $256 mn in the first quarter, HFR says.
The HFRX Korea Index led declines in the region in the second quarter, falling 10.8 percent after a gain of 6.3 percent in the previous quarter.
The HFRX India Index dropped 8.4 percent, after a first quarter increase of 19.2 percent. The indexes for Japan and China underwent a more modest drop, falling 1.5 percent and 1.6 percent, respectively, in the second quarter.
