The previous year has been challenging – to say the least – for the hedge fund industry in Asia. Performance has suffered with investors getting skittish on Federal Reserve rate hikes, a strong dollar, geopolitical uncertainties, and a global economic slowdown. The AsiaHedge Composite Index, which shows the median performance of Asia’s hedge funds, was down 6.6% in 2018.

But, amidst the chaos that has seen global stock market indices tumble a host of Asia’s hedge fund managers have managed to excel, and so were duly rewarded at AsiaHedge’s annual performance awards.

The AsiaHedge Awards, held at Sky 100 in Tsim Sha Tsui, Hong Kong on 29 November, saw well-known hedge fund managers, such as Segantii, Greenwoods Asset Management and Platinum Asset Management, as well as newer names, including Gen2 Partners and Brilliance Capital Management, pick up gongs.

All the shortlisted nominees and eventual winners were decided by a quantitative process, which aims to recognise the two primary aims of hedge funds – to manage volatility and to deliver positive returns for investors. The long-established methodology focuses on the risk-adjusted performance of funds, with our aim being to let the numbers do the talking.

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Kyle Shin and Ricky Tsang

The top award, Fund of the Year, was hotly contested between funds spanning multiple strategies but the eventual winner was Gen 2 Partners’ KS Asia Absolute Return Fund, which generated 36.1% with a Sharpe Ratio of 2.3.

Kyle Shin, who runs Gen 2 Partners’ KS Asia Absolute Return Fund, said one of the key drivers of the positive performance was interest rates, with Shin betting on the hikes of short-term rate rises and CDS pair trading (for instance, buying ROK vs selling China).

“We believed the default risk of Korea was higher than in China, especially in the beginning of the year when North Korea was provoked. It was a positive carry trade that also hedged my Korea exposures,” he told AsiaHedge.

According to Christopher Fix, managing director, head of Asia Pacific, CME Group the geo-political landscape of 2018 was a good backdrop for global macro funds to capitalise on trading opportunities.

“In the latter half of the year the focus on global trade wars and a more dovish than expected Fed outlook have continued to provide opportunities for hedge funds to take advantage of,” he said.

Not everyone had the same view, such as Roland Jude Thng, CIO of the Judah Value Activist Fund, which was the winner of the New Fund of The Year award.

“The market was really tough. Macroeconomic events were not supportive. It really boils down to the grit to find the very best ideas to produce the goods for investors,” he said.

He added that 2019 will see more of the same, with macroeconomic events providing managers with plenty to ponder. Yet, he added that he believes Asian equities are currently undervalued and this backdrop will hopefully serve hedge funds well this year.

CME’s Fix highlighted volatility in the emerging market space throughout 2018 as the hurdle many managers found difficult to successfully navigate.

“Two areas of focus that funds will be looking closely at for 2019 will be the state of US-China foreign relations and the resulting global trade implications, and the geo-political volatility Brexit will continue to bring to the markets,” Fix said.
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And while Gen2’s Shin also picked volatility as the biggest hurdle to performance last year, he pointed towards more operational factors playing a significant role in 2019.

“Banks are under substantial earnings pressure and need to cope with upcoming Basel IV and Basel V. We are hearing a certain bank has minimum AuM threshold of $300m to keep the execution account,” he said. “It’s getting tough for smaller Asian hedge funds to keep various trading relationship with the banks these days.”

Winners of the long-term awards, which showcase a hedge fund managers ability to provide returns over a five and 10-year periods, were the Helios Strategic Fund, Brilliant Partners Fund and the Segantii Asia-Pacific Equity Multi-Strategy Fund.

Segantii Capital Management is one of Asia’s prominent home-grown hedge fund success stories. The firm started in 2007 with $25.7m but has now grown to $3bn in assets, 74 staff and offices in Hong Kong and London.

During this time the firm has won more AsiaHedge awards than any other fund manager.

In its 11 years, Segantii has successfully navigated periods of market duress and dislocation – global financial crisis (2008), effects of Eurozone turmoil (2011), Chinese A-share weakness (2015), technology/US selloff (2018), Kurt Ersoy, CEO of Segantii, told AsiaHedge.

“There is a firm focus on non-beta driven returns, so that fund performance is less equity market dependent,” he said, adding that Segantii’s leadership sees great opportunity ahead and while recognising the challenges, is quietly confident that it can build on its success.

The firm’s aim for the next 10 years remains the same – how best to generate superior absolute returns for its investors, he said.

All the award winners of 2018 show that excellent performance can be obtained in even the harshest market conditions, but a continuing turbulent macroeconomic and political environment means Asia’s hedge fund managers continue to face a multitude of challenges in order to replicate that success.

Click HERE to see the full list of winners

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AsiaHedge Awards 2018: overcoming volatility on AsiaHedge.