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2013 Key Trends in Asian Hedge Funds

September 2013

Introduction Against the backdrop of an increasingly uncertain regional macroeconomic situation, the Asian hedge fund industry has shown increased resilience in 2013. The Eurekahedge Asia Hedge Fund Index is up 7.77% July year-to-date, with the total assets under management (AUM) of the industry currently standing at US$ 139.0 billion managed by a population of 1303 hedge funds. The size of the industry stood at US$14 billion as at end-1999 and over the next eight years it grew to US$176 billion by end of 2007 a period which saw strong growth in the number of fund managers setting up shop in Asia. As at end-2007, the total fund population in the region stood at 1237 funds up from 145 funds in 1999. Some of the gains were reversed by the advent of the financial crisis which saw the Eurekahedge Asia Hedge Fund Index decline 20.27% in 2008 and also ushered in a spate of fund liquidations as managers struggle to deal with negative returns and redemption requests from investors. The industry bottomed out in April-2009 with AUM declining to a low of US$104.8 billion before witnessing a rebound of sorts amid rallying equity markets and some positive asset flows in the second half of 2009. Since April 2009 the industry has posted a steady recovery with total AUM increasing by 32.7% to bring the total size of the industry to US$139.0 billion. Total AUM of the Asian hedge fund industry is still 21% below its 2007 peak, and the overall share of the Asian hedge fund AUM as a percentage of the global industry has declined from 9.3% in December 2007 to 7.36% as of July 2013. As prospects of a rollback in quantitative easing gather momentum in the US, the Asian hedge fund industry faces some challenges going into the future. Figures 1a 1b: Industry growth since 1999
1,400 1,200 200 180 160

Number of funds

800 600 400 200 0


1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Jul13

120 100 80 60 40 20 0
Number of funds AUM (US$ billion)

Source: Eurekahedge

As illustrated in Figure 1b, the industry rebounded on the back of strong performance-based gains and asset flows in the 12 months following up to 2Q 2011 which saw the industrys total AUM increase by US$18.8 billion. The Eurekahedge Asian Hedge Fund Index was up 8.97% in 2010.

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THE EUREK AHE DGE REP ORT S EPTE MBE R 201 3

AuM (US$ billion)

1,000

140

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