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 funds.
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
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
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
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 managers.
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’
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.