Asia-Pacific-based Investors in Hedge Funds - July 2012

by Ivan Jincheng Han

  • 02 Jul 2012
  • HF

The Asia-Pacific is a relatively young and growing hedge fund market. As it continues to evolve and become ever more important to the asset class, we take a look at the make-up of the Asia-Pacific-based hedge fund investor universe. 

There are currently 281 institutional investors in Asia-Pacific that actively invest in hedge funds, or are considering doing so. Superannuation funds are the most common investor type in this bracket, accounting for 22% of the space. Other prominent investor types within Asia-Pacific include private sector pension funds (15%) and funds of hedge funds (14%).  These 281 investors have a combined $85bn invested in hedge funds, making them an important source of funds for the industry. 

Institutional investors based in Australia make up the greatest proportion of Asia-Pacific-based investors in the asset class, accounting for 34% of all investors. This is followed by Japan-based institutions (32%) and those located in Singapore (10%). Asia-Pacific-based investors (excluding fund of funds managers) have an average current allocation of 8% of total assets to hedge funds, which is below the average long term target allocation for investors in the region, which stands at 13%. With an average allocation below that of their long term target allocation, Asia-Pacific-based investors are likely to continue being a significant source of capital for hedge funds managers. 

Asia-Pacific-based investors in hedge funds are open to investing in a wide range of geographical regions, with 62% expressing an interest in investing globally (or having operated such a wide mandate in the past). Asia-Pacific investors in hedge funds also have a strong preference for investing locally, with 38% showing a preference for investing in Asia. North America (26%) is the second most favoured region, while Australasia (23%) follows as the third most preferred region for hedge fund investment by Asia-Pacific investors. 

In terms of strategy, long/short equity is the most popular strategy for Asia-Pacific-based institutional investors in hedge funds, with 35% of the pool having either previously invested in the strategy or having a preference for doing so. This is closely followed by multi-strategy (27%) and macro (22%) as the second and third most preferred strategies.

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