Hedge fund assets under management (AuM) in Asia dropped significantly in second half of 2018 as markets suffered in the wake of various geopolitical and macroeconomic pressures, according to data from AsiaHedge.

From a high of $345bn as of June 2018, by the year end Asia’s hedge fund AuM was down to $328bn. The loss of more than $15bn occurred during a period of prolonged market volatility and poor performance for the region’s hedge funds.
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Tracking the returns of all the fund managers listed in the AsiaHedge database the median return came back at a disappointing -6.6%.

Chinese equity long/short strategies were the poorest performers in 2018, with the average return -17.9%. By comparison the MSCI China Index stood at -18.9% by the end of December, while benchmark Shanghai Composite Index was down around 25%, making it the worst-performing major market in the world in 2018.

With performance stalling several well-known fund managers exited the hedge fund space in H2 2018. Macquarie shut its Macquarie Asian Alpha Fund, one of Asia’s longest running Asian-focused quant funds, as the strategy suffered trading losses. Hong Kong-based CLSA Group shut down its alternative investment business, CLSA Alternative Investment Management. CLSA Alternative Investment was running two hedge fund strategies, its flagship pan-Asia multi-strategy fund and its fund of hedge funds. Meanwhile, Adamas Asset Management is shutting down its hedge fund platform and fund of hedge funds product to focus solely on private credit investing.

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Yet, while AuM was down in H2 it was still up year-on-year with last year’s $328bn marginally outstripping 2017’s total AuM of $326bn.

The consensus in the market was that the wild ride for Asia’s stock markets in 2018 caused the immediate appetite of asset allocators towards hedge fund investing in the region to lower. But, large-scale institutional investors still talk of a positive long-term outlook on Asia.

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Asia’s assets wipeout on H2’s wave of volatility on AsiaHedge.