We have discussed the best of hedge funds in the first quarter in a previous article. The period was not particularly charming for the industry, but was particularly gruesome for Asia and emerging markets. Equity markets in these regions went through big falls, making long/short equity managers suffer, while macro managers did relatively better. On the other hand, European hedge funds did better than other regions, as they recorded their 16th consecutive month of inflows with AUM rising to a record high of $476.2 billion, according to a Eurekahedge report.
Emerging markets’ hedge funds suffer with the markets
According to the same report, Japanese hedge funds, the star performers of last year, continued to lose for the third consecutive month. The regional index was down 2% in the first quarter. Following the same road, Eureakhedge’s Asian and Emerging Markets index detracted by 0.5% each in the first quarter.
In the emerging markets, Adelphi Emerging Europe detracted 6.8% after gaining 21% in 2013. Firebird New Russia and Firebird Republics Fund returned -12% and -5.5% respectively. Armajaro Emerging Markets Fund was down 7.3% in Q1; the hedge fund has had a bad run in both its EM and commodities focused funds.
In the macro category, Bluecrest Emerging Markets Fund is up 0.77% for the first quarter. The Green fund recorded a 3% loss in Q1, the fund manages $8 billion.
Japanese and Asian hedge funds reverse gains
Robert Karr’s Joho Fund lost 4.7% in Q1 – the fund invests primarily in Asian equities and manages $2.7 billion in this fund and $4.9 billion firm-wide. Joho Capital announced that it will be becoming a family office by the end of March quarter, so this will be the last of the returns we will see from this tiger cub. The fund enjoyed a particularly brilliant return in 2013, up 30%.
Among macro hedge funds focused in Asia and EMs, Sinfonietta Fund, a star performer of last year with +34.5% return, is now the worst performer with a -9.7% return through the end of March. Fortress Asia Macro Fund, a $2.3 billion strategy, has so far lost 3.6%.
Zeal China Fund, with $656 million in assets under management, lost 6.5% in Q1 after CC Asia Absolute Return Fund collapsed in the period with a -12% return. The fund manages $430 million and was up 10% in 2013. Telligent Greater China fund was down 1.7% in the first quarter after losing 5.7% in March.
The few who managed to stay afloat in Asia were Golden China Fund with +1% return, WF Asia Fund +1.2% and Nezu Cyclicals Fund with 1.3% gain in first quarter.
Among Japan-focused hedge funds, hardly any fund was able to bag a positive return over the last quarter. The biggest loser was SR Global Fund with a -17% loss in the three-month period; the fund netted a +60% gain in last year. Martin Currie Japan Fund was down 7% in the quarter after recording a +29% return in 2013. The hedge funds who were less unfortunate were Hendreson Japan ABS Return Fund, down 3.8%, SFP Value Realization, which slipped -1.2% and Arcus Japan, down 2% in Q1.
All returns mentioned in this article are from HSBC Hedge Weekly