Asian Hedge Fund Assets Hit Record, Top $177 Billion

Assets under management at Asian hedge funds reached a record $177 billion in May, according to new data from Eurekahedge.

The tally exceeds the $176 billion managed by funds with an Asia mandate in December 2007, immediately prior the global financial crisis, noted Eurekahedge’s Alexander Mearns in an interview with Bloomberg.

The news comes as the number of hedge and private equity funds registered in China alone has exploded as stocks in the nation surge. The number of private investment funds – which includes securities, PE and venture vehicles – rose by more than 4,000 in just the last three months, according to the Financial Times.

Capital has flowed into Asian-themed funds this year as China’s stock market capitalization has nearly doubled, to $9.6 trillion. If inflows continue, Asia’s hedge fund industry could be managing north of $200 billion relatively soon, noted Mearns.

However, the rise in assets comes as the Shanghai Composite Index’s strong year-long uptrend has withered recently, ending down 13.3% this week alone in its worst showing since the global financial crisis. China is clearly the linchpin on which the trend is based, with approximately 40% of all assets invested in Asia allocated to hedge funds investing in China.

Meanwhile, data from Eurekahedge suggests the focus of Asian hedge funds is shifting as they become more sophisticated. While long/short equity funds accounted for approximately 70% of Asian funds in 2002, they are only estimated to be 39% of the total now.

The difference has been due to the growth of more complicated multi-strategy and macro funds, Eurekahedge noted, as well as the increased ease and low cost of implementing more exotic trading strategies now compared to ten years ago.

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