Hedge Funds Look to Expand in Asia

Hedge funds are looking to increase exposure to the region given the opportunities there, according to a survey by J.P. Morgan. Hedge funds are looking to grow further in Asia, with close to half of the investors surveyed by J.P. Morgan planning to do so. This is despite likely outflows experienced by fundamental long-short equity, event-driven, and managed-futures strategies, the survey found.

Asia is a continuously opening market and there will be more funds going in there to take advantage of potential asset-price dislocations and opportunities, Michael Monforth, global head of capital advisory at J.P. Morgan, said in a statement.

Searching For Higher Returns

Despite the instability and poor performance that the market has shown in 2018, institutional investors are nonetheless still investing in hedge funds this year as they search for high returns and other ways of investment.

For some markets, unwinding of QE or a global slowdown is akin to a rock band losing its lead singer: Investors are looking to alternatives, Monforth added.

Asset Price Dislocations

2018 was the biggest annual loss for the industry since 2011, falling by 4.8 percent on a fund-weighted basis according to Hedge Fund Research Inc. Hedge funds witnessed a $33.5 billion in outflows and the number of startups was at its all-time low since 2000.

Investors remain apprehensive about hedge fund crowding, style drift, and transparency, according to the survey.