Positive Outlook for Event Driven Funds in the Asia-Pacific Region – November 2013

by Marian Rajanathan

  • 25 Nov 2013
  • HF

Event driven strategies in the Asia-Pacific region – including activists, distressed, event driven, risk/merger arbitrage and special situations funds – have performed well in 2013, fuelled by corporate uncertainty which includes mergers & acquisitions, restructuring, financial distress and debt exchange activities. Over the last six months, funds managed by these managers have performed well compared to their global peers, with the average Asia-Pacific-based event driven fund returning 6.10%, compared to the global event driven average of 5.16%. Asia-Pacific-based event driven funds also outperformed their global peers for the month of October, bringing in returns of 1.87% compared to 1.46%.

There is growing interest in event driven strategies amongst both fund managers and investors as the Asia-Pacific hedge fund industry begins to gradually diversify away from the traditional long/short equity funds. Preqin’s Hedge Fund Analyst reveals that 20% of all fund managers based in the Asia-Pacific region offer event driven funds to their investors. A high percentage of these managers look to invest in Asia (87%) including a number targeting specific countries such as China (45%), Japan (43%) and Australia (39%).

From the investor point of view, Preqin’s Hedge Fund Investor Profiles shows that 36% of institutional investors based in the Asia-Pacific region will invest in event driven strategies. The most common investor type within these investors is fund of hedge funds managers (representing 39% of event driven investors), followed by superannuation schemes (20%) and asset managers (12%). A large proportion of these investors are based in Australia (48%), followed by Japan (21%) and Hong Kong (13%). In terms of geographical preferences, a large percentage of the Asia-Pacific investors in event driven funds choose to invest globally (83%), whilst there is a good balance of investors targeting specific regions, investing in Asia (60%), North America (49%) and Europe (39%).

There should be plenty of fundraising opportunities for Asia-Pacific event driven fund managers in the future, not least due to the large gulf between the pool of fund managers offering event driven strategies (20% of Asia-Pacific fund manager pool) as compared to the proportion of investors interested in the strategy (36% of Asia-Pacific investors). The Fund Searches and Mandates feature on the Preqin database also shows that 45% of Asia-Pacific investors looking to invest in hedge funds in the next 12 months will target event driven strategies, with 54% of these investors seeking opportunities within the Asia-Pacific region. As the Asia-Pacific financial markets continue to deepen, offering new investment and fund raising opportunities, the prospects for these event driven hedge fund managers look positive.

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