After finishing the first quarter on a positive note, the sector was knocked back in April, figures show.

April was a poor month for Asia’s hedge funds, with Chinese hedge funds falling into the red for three straight months through April after surging 5.8 per cent in January and 31.1 per cent in 2017. Even so, funds made ground overall in the first three months of this year. In April, Indian-focused funds set the pace for strongest returns.

Performance was hit by some depreciation to the Chinese renminbi and Japanese yen, according to Hedge Fund Research, a firm following trends and data on the space. 

In HFR’s case, its data showed that in the first three months of this year, the HFRI EM: China Index climbed 0.8 per cent, clearly outperforming listed markets, as shown by the 4.2 per cent decline of the Shanghai Composite Index by over 500 basis points (bps) in 1Q18. 

However, the HFRI China Index declined 1.3 per cent in April, bringing the YTD return into negative territory to -0.5 per cent, though the index remains over 600 bps above the Shanghai Composite through April-end.           

Capital
Total Asian hedge fund capital increased by $810 million to end 1Q18 at $123.0 billion of assets under management, the second highest level in history, topped only by the $126.3 billion in 2Q15. The small net capital inflow of $940 million was only the second quarterly capital inflow into Asian hedge funds since the record level of 2Q15, HFR said.

Indian-focused hedge funds led Asian returns in April 2018, with the gain in direct contrast to the declines of the HFRI China and Japan indices. The HFRI Emerging Markets: India Index surged 3.9 per cent for the month after losing 8.4 per cent in 1Q18.

The broad-based HFRI Fund Weighted Composite Index® (FWC), which includes hedge funds globally of all strategies and regional investment focus areas, advanced 0.44 per cent in April, increasing the YTD return to 0.41 per cent. As reported previously by HFR, total capital invested in the hedge fund industry globally increased to a record $3.2 trillion in 1Q18.

The HFRI Japan Index also fell for the third consecutive month in April, as the index declined by 0.12 per cent for the month, which followed a 0.42 per cent loss in 1Q18, resulting in a YTD drop of 0.5 per cent.