© Reuters. Thai investors sit in front of an electronic board displaying live market data at a stockbroker’s office in central Bangkok, Thailand, August 24, 2015. REUTERS/Athit Perawongmetha/Files
(Updates company description in fourth to last paragraph)
by Summer Zhen
HONG KONG (Reuters) – With traditional stock and bond portfolios weighing on investors this year and losing market returns in China to them, Asia’s most active primary fund providers are instead pouring money into hedge funds with strategies unrelated to the major megatrends.
This means that hedge funds may struggle to raise startup capital in the coming months unless their portfolio is prepared to exploit market volatility or a future topic, such as clean energy.
HS Group, a major seed capital provider based in Asia with a portfolio of more than $7.5 billion in alternative asset managers and assets under management (AUM), invested in three hedge funds in 2022.
Among them is Aregence Capital Management, a short-term equity fund based in Singapore and India. Another firm, Mercator Partners, which runs a global long/short decarbonization strategy, buys companies in the new energy supply chain while shorting companies outdated business models or growing carbon policy commitments.
“This year has been really pivotal,” said Michael Jarrow, chief investment officer and co-founder of Hong Kong-based HS Group.
“As central banks cut liquidity to fight inflation, indices fell and many of the strategies that have grown in popularity over the past decade have fallen too, which means the growth of technology, the Internet and the early stages.”
Garrow did not disclose the size of each investment but says this is an exciting time to get involved in emerging markets outside of China, as they are less crowded. Equity funds in which HS Group invests also have active short positions.
Equity and fixed income investors have struggled to make money this year as the US Federal Reserve and other major central banks quickly raised interest rates to fight inflation, removing the easy money tailwind. Asian investors faced greater challenges as Chinese markets came under attack due to the country’s strict anti-coronavirus policies and the collapse of the real estate sector.
Just 24 new hedge funds launched in Asia in the first half of 2022, raising just $1.8 billion, according to data from With Intelligence. That compares to 44 new hedge funds launched in the first half of 2021 and 78 hedge funds for the full year.
A November Goldman Sachs (NYSE:Prime Services) survey of allocators, who are mostly Asia Pacific investors, found that “non-correlated” strategies were the most popular, chosen at 31% and outperforming traditional short-term equity strategies.
SHK Capital Partners, the fund management subsidiary of Hong Kong-listed Sun Hung Kai & Co., pledged $100 million to GCO Asset Management in June, a fund that trades on macro topics such as Fed rate policy or Russia shutting down gas supplies for a period. long or short. bond positions.
SHK said another fund they have invested in, ActusRay Partners, an unspecified quantitative fund including one based in Hong Kong and focused on European equities, saw its assets under management balloon to $300 million from $20 million when it launched in March 2021. .
China wealth managers and other institutional clients at SHK Capital Partners are diversifying away from strategies that rely on the local market.
said Marcella Lowe, Head of Fund Distribution and Investment Solutions at SHK Capital Partners.
(This story has been rewritten to update the company description in the fourth-to-last paragraph.)