By Aradhna Dayal
In London recently to meet some of the largest European allocators and Asian managers based there, I noticed a couple of clear trends. After a hiatus of almost five years, European interest is coming back into Asia in a big way. And Asian funds themselves are leaving no stones unturned in their move to go global.
Both these trends can potentially have a significant impact on the growth of the Asian hedge fund industry, and there is a strong co-relation between the two. European funds of funds, family offices and institutional investors have a long history of investing with Asian hedge funds, and many of the long-standing managers in Asia were originally seeded by these investors.
Culturally, too, there is a better understanding between Europe-based allocators and Asian managers, and European investors are known for their long-term commitments once they write the cheques.
During my conversations with European investors, it was clear why the conviction in Asia is back with a bang. Many in Europe seem disillusioned with the returns in domestic markets and increasingly insular policies at home, and are equally wary of the heady markets in the US, leaving Asia as a key bet in their portfolios for the coming year.
With the Japan story powering ahead, valuations in China hitting rock bottom, a resurgence in South East Asian markets and a dynamic new central banker in India set to revive the battered Indian currency, Asia is emerging as the new Silk Road – one that European investors are as keen to tread as were the intrepid merchants and travellers of the ancient times that came to China, India and Central Asia in search of unique and valuable commodities.
While the likes of Kairos Partners, NewAlpha Asset Management, Parley Company, Hermes BPK, USS, BT Pension and the University of Cambridge have historically been active investors in Asia, two recent examples of European investors increasing their clout into Asia include UK-based City Financial Investment Company and Swiss investor Gottex Fund Management.
Gottex has formed a partnership with Headland Strategic, a new Hong Kong-based seeding platform established by former Blackstone executive Michael Garrow and ex-Goldman Sachs director Johannes Kaps. Meanwhile, City Financial has joined forces with the veteran Asian macro portfolio manager Geoffrey Barker for the launch of his new macro strategy early next year.
We cover both these stories in this issue of AsiaHedge, and anticipate that the return of European capital into the Asian hedge fund space will accelerate the recovery of the Asian hedge fund industry, which grew by a robust 10% to pass $150 billion in the first half of this year.
The ancient Silk Route also served as a key conduit for technologies, culture and philosophies between Asia and Europe, and it is no different for the hedge fund world.
The European investors bring with them a strong fundamentals-based investing approach as well as expectations of a world-class infrastructure/processes and portfolios from the hedge funds they invest in, and this will go a long way in the institutionalisation and globalisation of the Asian hedge fund industry.
Indeed, some of the most prominent hedge funds in Asia today have global elements to their investment themes. Among the clearest examples of this are Ortus, which trades the global currency market, and Turiya Capital, which has a global equity long/short mandate.
Continuing our European connection theme, we also feature Sloane Robinson, the long-running London-based Asia manager, in this month’s fund profile. The manager expounds on why it continues to be bullish on Japan.
Aside from that, we bring you special coverage on some of the largest onshore China hedge fund managers in this issue of AsiaHedge – and a full report on the first AsiaHedge China Forum, which was held on 12 September in Shanghai.
Finally, this issue is full of performance reports on some of the hidden gems in the Asian manager space – which could now be well poised to receive allocations from European investors searching for undiscovered jewels in Asia once again.