A significant rally across Asian stock markets in December boosted median returns among Asia-equity focused long/short managers, with the AsiaHedge Composite Index climbing 2.31% during the month to bring the overall median return for 2012 to 6.95%.
While this proved underwhelming in the light of a 4.11% gain shown by the benchmark MSCI Pacific Free Net index in December, it allowed Asian hedge funds to end the year higher than their global counterparts. The EuroHedge Composite and the Absolute Return Composite indices, which measure returns of European and US funds, delivered an estimated 4.83% and 6.49% in 2012, respectively.
In Asia, the biggest gainers for the year were India-focused funds (15.94%), followed by Australian funds (14.71%), Asia ex-Japan funds (13.1%), Asia inc-Japan funds (8.86%). China funds turned the corner in the fourth quarter, ending the year at 8.21%, while Japan funds were up 7.53%.
In December, too, Japan and China focused managers shone brightly, though even they lagged the red-hot gains made by relevant benchmarks during the period. Median returns for US dollar-denominated Japan funds stood at 4.54% in December. By comparison, the Nikkei 225 in December climbed 10.05%.
A significant depreciation of the yen during the month contributed to a lower median return of 3.66% for yen-denominated managers, a sub-par performance compared to the 10.02% gain made by the TOPIX during the month that served to further widen the return gap for the full year. In 2012, the benchmark climbed 18.01%, more than double the 8.29% median gain in this specific manager category.
China-focused managers were up 4.50% in December, slightly behind the 4.81% gain in the benchmark. Asia-ex Japan managers returned 2.54%, Asia inc-Japan managers were up 1.87%, Australian managers posted 1.80% and India managers raked in 1.19% gains in December.