Asian hedge funds outperform market for 3 consecutive months

As global AUM hits record US$1.88 tn.

According to the Eurekahedge Report, most major hedge fund investment regions delivered positive returns May, with Asia ex-Japan hedge funds reporting the strongest returns during the month. 

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The managers outperformed the market for the third consecutive month gaining 2.04% in May while the MSCI Asia Ex Japan Index[3] was down 4.35% - the largest returns were posted by funds focused on Greater China, up 4% in May.

The Eurekahedge Japan Hedge Fund Index was down 0.15% in May, bringing its year-to-date return to 17.68%, and ending the eight-month winning streak of Japan focused hedge funds.

The month’s return represents an outperformance by the managers as the Nikkei 225 declined 0.62% while the Tokyo Topix was down 2.52% during May. Japanese markets witnessed some volatility during the month as the Nikkei fell 7.3% in a single day, amid concerns about US stimulus, before rallying at the month end after some positive announcements from the Japanese central bank.

Hedge funds witnessed the seventh consecutive month of positive returns in May amid mixed returns in global markets. The Eurekahedge Hedge Fund Index was up 0.32%[1] during the month, while the MSCI World Index[2] declined by 0.45% in May.

May started off on a good note with positive economic data from the US, leading to rallies in global equity markets, specifically in North America where market indices reached all-time highs. The US dollar strengthened against most major currencies, going above 100 level against the Japanese yen for the first time since 2009.

The positive sentiment turned mid-month amid weak manufacturing numbers from China and uncertainty regarding the withdrawal of the US Federal Reserve’s asset purchase program.

Total assets under management (AUM) increased by US$3.1 billion during May, bringing the size of the industry to US$1.88 trillion. Impact of performance on total assets was slightly negative in May as managers lost US$1.5 billion over the course of the month. On the other hand net flows were positive for the fifth month running with US$4.6 billion in net allocations.