By Aradhna Dayal
As 2011 draws to a
close - the November/December issue of AsiaHedge is our last
hard-copy edition for the year - it seems a timely moment to
reflect on what has been a rollercoaster year for Asian hedge
The year started on a buoyant note, with industry assets
showing a healthy 15% recovery in 2010 and a steady flow of
institutional capital - especially from the US - beginning to
flow into Asia-dedicated strategies.
These factors set the scene for the emergence of Asia's very
own home-grown, post-crisis billion dollar club - with several
high-quality start-ups and re-launches, such as Senrigan,
Janchor, MAM, DragonBillion and Dymon Asia, quickly reaching
the $1 billion mark in assets.
Others such as Ortus Capital inched towards the landmark $3
billion mark, while new firms such as Azentus - the biggest
launch of the year, now at nearly $2 billion - showed that
Asian start-ups could rival their global counterparts in launch
sizes and international appeal.
While the fact that Asia emerged as a beacon of hope in a
world mired in macro uncertainties and rapidly deteriorating
Western economies was a major driver in the resurgence of
global interest in Asia, so too were factors specific to hedge
funds in the region.
Most particularly, it was the new institutionalisation that
Asian hedge funds embraced post the 2008 crisis - in terms of
investment processes, risk control and infrastructure building
- that helped to unleash allocations from some of the top
allocators of the world.
A good example of this were the China-focused managers -
historically seen as highly beta-prone - that embraced risk
management and shorting techniques to protect the downside when
volatility started rising again in May.
Starting in the second quarter of the year, when the
Eurozone crisis began taking its toll on the market and the
macro environment turned tricky for Asian hedge funds, managers
went on the defensive and delivered what hedge funds are really
meant to do - protecting capital for investors and displaying a
mix of short-term trading, shorting skills and the exploration
of niche areas from carbon trading to renminbi bonds to
generate alpha in innovative ways.
The other major event that the Asian industry had to cope
with, back in March, was Japan's earthquake, tsunami and
nuclear disaster - the shockwaves from which hit financial
markets globally as well as causing devastation in Japan.
What impressed me, however, was the sense of solidarity and
the spirit of revival - so typical of Asia - that followed.
Japanese managers and their families - many of them travelling
to the AsiaHedge Forum in early March - were inundated with
hosting offers from the Hong Kong and Singapore communities.
Equally impressive, though, was the quick capitalisation by
managers of once-in-a-lifetime investment opportunities in
crippled sectors such as autos and food exports, as well as in
areas such as new energy solutions and reconstruction.
So in many ways, the year 2011 will be remembered for the
Asian hedge fund industry truly coming to age - and displaying
a new-found savviness and adoption of all-weather strategies,
which will go a long way towards dispelling widespread notions
of all Asian hedge fund managers as being momentum-driven,
boutique and beta-focused.
And yet, the challenges remain. Despite its rapidly growing
educational, entrepreneurial, affluence and consumerism culture
- key ingredients of the classic economic growth seen in the
developed world a century ago - Asia remains significantly
under-allocated in the portfolios of global investors, many of
who still feel uncomfortable at the manager and markets level
when it comes to Asia.
As that changes - helped by the entry of large global
players such as GLG, Soros, Moore and Fortress into the region,
with plans to launch Asia-dedicated strategies - the Asian
hedge fund industry will continue to grow steadily, albeit
restricting entry only to high-quality, long-term institutional
The 10th AsiaHedge Awards were a testament to that and we
bring you full coverage in this issue of the glittering
industry night last month and the winners' investment
This has also been a year of major geo-political changes
around the globe, and a candid Q&A with eminent
thought-leader and Yale professor Ted Malloch explores the
merits of doing more virtuous business in a new world
Finally, this edition looks ahead to some of the key new
launches such as Open Door, Rega and a special sits Vietnam
real estate fund from Saigon Asset Management that we will see
So here is hoping for a thawing of the macro scene - and
rejuvenated industry performance and capital inflows - in 2012,
and we would like to take this early opportunity to wish all
our readers and friends a very Merry Christmas in advance from
all the team at AsiaHedge.