Macro hedge funds lead gains in Asia; Japan shines
ASIA’S macro hedge funds, which trade on economic trends, have outperformed other strategies so far this year, even as they manoeuvred wild moves in global bond markets, while Japan-focused funds also thrived on a domestic stocks rally.
Asia-focused macro hedge funds, which typically trade a wide range of assets from a top-down economic viewpoint, were up 6.1 per cent on average by June, Eurekahedge data showed, compared to a 1.1 per cent gain for all Asian hedge funds.
Analysts expect policy and inflation divergence between Asia and western economies to help create such profitable opportunities for macro funds for the rest of the year.
Benjamin Low, a senior investment director at global investment advisory firm Cambridge Associates, said most macro funds did well, but the performance of long-short equity funds – which bet on stock prices rising and falling – was mixed.
“Those focused on Japan have done better on a relative basis, than those that are more China-focused,” he said.
Unlike global peers that struggled in the first half, most Asia macro funds escaped the turmoil in US rates amid the banking crisis, and also managed to bet profitably on themes such as a weak yen and China’s reopening, Low said.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Investors said performance was also helped by carry trades betting on the variance in policy cycles.
Hong Kong-based macro hedge fund Hong Investment Advisors (HIA), for example, saw its flagship HCM Rapier Fund generate a 7.6 per cent net return through May 2023, profiting from trading interest rates.
“I continue to believe that deglobalisation will stay and Asia will have deflationary pressures, while the Western world will continue to face inflationary pressures,” said Shun Hong Liu, chief investment officer of HIA.
In contrast to the US Federal Reserve and European central banks, most central banks in Asia are dovish or even easing policy.
“Asian macro managers expect the varying rates dynamics across the region against the US to be important return drivers,” said Gunther Jost, head of investment specialists and hedge funds for Greater China at UBS Global Wealth Management.
Among equity funds, hedge funds that specialised in Japanese equities gained 5.5 per cent, Eurekahedge data showed. A separate gauge, the HFRI Japan Index, jumped 6.7 per cent this year through June, despite underperforming the benchmark Nikkei.
The Nikkei 225 has surged 27 per cent this year, hitting 33-year highs driven by corporate reforms, signs of an end of years of deflation and billionaire investor Warren Buffett’s endorsement.
PanView Capital, a long-short equity fund based in Hong Kong, saw its main fund gain 12.8 per cent in the six months to June, helped by its wager on Japan, which has become its largest country exposure, according to a factsheet seen by Reuters.
PanView did not respond to a request for comment.
Cambridge Associates’ Low said his firm was seeing more investor enquiries about Japan-focused funds.
In contrast, Greater China-focused funds have lagged, as the stock markets suffered due to a disappointing economic recovery and rising geopolitical risks. They lost 3.6 per cent by June-end, according to Eurekahedge, while the HFRI Emerging Markets: China Index was down 0.3 per cent. REUTERS
Share with us your feedback on BT's products and services
