Asia-based hedge funds 'hit badly by redemptions'

HONG KONG • Asia-based hedge funds are facing the worst redemption pressures in five years, with investor withdrawals cutting regional industry assets by about 10 per cent in the first half, according to the data provider eVestment.

Asian managers suffered US$6.3 billion (S$8.6 billion) of capital outflows in the six months, making them the worst hit among global peers this year, eVestment said in a report on Thursday that also estimated regional industry assets at US$54.9 billion.

Asia has seen net redemptions for seven consecutive months through June, or nine out of the last 10 months, according to the report.

Investor disappointment with the hedge fund industry is mounting globally as many managers have not been able to beat benchmarks amid market shocks from Britain to China.

Political events and government stimulus have amplified market volatility, giving the global industry the worst first quarter since 2008, according to an index compiled by Chicago-based Hedge Fund Research.

GLOOMY

While it appears the heaviest redemption pressures may have passed, investor sentiment continues to be negative.

EVESTMENT, on China funds.

The Eurekahedge Asian Hedge Fund Index retreated 2.5 per cent in the first six months of this year, trailing the 1.1 per cent advance of the global industry gauge of the Singapore-based data provider.

Redemptions were the heaviest from Asia-based funds that lost money last year, according to eVestment data.

Last year's losers with less than US$1 billion of assets collectively reported nearly US$2.2 billion of outflows in the first half, while redemptions from larger peers approached US$2.3 billion.

Funds investing in China saw US$126.5 million of capital outflows in June, less than the pace in May, eVestment said.

"While it appears the heaviest redemption pressures may have passed, investor sentiment continues to be negative," it said of China funds.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on July 28, 2016, with the headline 'Asia-based hedge funds 'hit badly by redemptions''. Print Edition | Subscribe