Preqin: Investors In Asia Pacific Increase Hedge Fund Allocations

Jul 27 2017 | 5:41pm ET

Investors in the Asia-Pacific region have stepped up their allocations to hedge funds, according to research from Preqin, reaching a record $202 billion as of the end of last year. 

The majority of capital invested in hedge funds by investors based in Asia-Pacific comes from sovereign wealth funds, Preqin’s research shows, with some investors making their first forays into the alternative investment segment in 2016.

The 12.2% increase over 2015’s tally of $180 billion flies in the face of recent allocation trends seen among North American and European investors, which generally saw a greater interest in pulling back their exposures to hedge funds last year than in adding to them. 

Highlights of Preqin’s recent Asia-Pacific hedge fund research: 

  • Preqin currently tracks 588 Asia-Pacific-based institutional investors in hedge funds, which collectively have $202 billion invested in the asset class. 

  • Sovereign wealth funds account for 54% of capital invested in hedge funds by Asia-Pacific-based investors, while asset managers (10%), private sector pension funds (8%) and insurance companies (8%) also account for significant proportions. 

  • Some of the largest investors in the region are sovereign wealth funds: Singapore’s GIC allocates $10.5 billion to hedge funds, while Australia’s Future Fund allocates $14.8 billion and the China Investment Corporation invests an estimated $30.8 billion in hedge funds. 

  • Australia contains the largest number of hedge fund investors in the region (185), followed by Japan (118) and Hong Kong (92). 

  • Singapore-based institutions have the highest average allocation to hedge funds, at 14.1% of their assets, while Hong Kong- (13.9%) and Japan-based investors (13.0%) also allocate significant proportions. 

“The Asia-Pacific hedge fund industry is becoming an increasingly important part of the global landscape,” said 
Amy Bensted, Head of hedge fund products for Preqin. “Regulatory changes and increasing institutionalization in the region is exposing growing numbers of countries and investor types to opportunities in hedge funds. Although the capital flow is currently driven by sovereign wealth funds, there are signs that the industry’s appeal is attracting an increasingly diverse range of investors. In particular, it will be interesting to see if investors in emerging Asian economies will become more involved with the asset class.” 

Founded in 2003, Preqin is a leading source of information for the alternative assets industry, providing data and analysis via online databases, publications and bespoke data requests. The company's Hedge Fund Online service is a leading source of intelligence on the hedge fund industry, with performance information for over 16,000 hedge funds across strategies and geographies. More than 47,000 professionals in 90 nations use the company’s products. 

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