Persisting Impression of Japanese Hedge Funds' Excellence
In the world of hedge funds, the views expressed in this article are those of the author and not necessarily those of AlphaWeek or The Sortino Group. One region that continues to garner attention is Japan, where structural inefficiencies persist, leading many investors to favour Japanese hedge funds over others.
Despite a relatively small universe of approximately 80-120 managers, many of which are closed to new investors, the Japanese hedge fund market has seen an increase in new launches. This surge is due to both established portfolio managers leaving hard closed funds to set up on their own and existing managers launching new funds.
Japanese hedge funds have demonstrated a unique ability to cope with volatility, outperforming long-only equity markets in Japan this year. The HFRI Japan Index has outperformed the TOPIX Index by approximately 3.1% year to date. Moreover, Japanese hedge funds have managed to avoid a significant part of the market's downside, including during the 2008 crisis.
The range of strategies offered by Japanese hedge funds is diverse, including systematic, trading oriented, fundamental long short, shareholder activists, sector specialist, and idea-focused strategies. All seem to have an ability to manage risk and take advantage of opportunities in the Japanese market.
However, when it comes to specific performance data for 2018, our search results do not provide direct information about the top performing Japanese hedge funds. While key Japan-focused equity funds like the Worldwide Japanese Fund and the Templeton Japan Fund exist, performance details for 2018 are not specified in the results.
Broader emerging market funds, such as the GAM Sustainable Emerging Equity Fund, have shown strong returns over recent years. However, these funds do not reflect hedge fund strategies or risk management explicitly and are not Japan-specific.
Data from a Bank of Japan research paper indicates growing foreign investment flows into Japanese assets, which may affect the performance environment Japanese funds operate in. Yet, it does not detail hedge fund performance or risk control measures by year.
To fully understand the performance of Japanese hedge funds in 2018 and their risk management measures, specialized hedge fund industry reports or databases like Hedge Fund Research, Preqin would be necessary.
Despite the lack of specific data, it's clear that Japanese hedge funds have a history of long-term outperformance compared to global peers. The author remains constructive about future new launches in the Japanese hedge fund market and encourages a higher allocation of investments in Japanese hedge funds compared to other hedge funds.
One of the biggest challenges for investors in Japanese hedge funds is securing capacity with the best managers. However, many Japanese hedge funds have generated respectable absolute returns with limited risk, making them an attractive option for those seeking to navigate the complexities of the Japanese market.
Patrick Ghali, Managing Partner at Sussex Partners, emphasizes the potential of Japanese hedge funds, encouraging a closer look at these funds as a means to capitalize on the opportunities that the Japanese market offers. As the market continues to evolve, it's likely that Japanese hedge funds will remain a key player in the global hedge fund landscape.
References: 1. Worldwide Japanese Fund 2. GAM Sustainable Emerging Equity Fund 3. Templeton Japan Fund 4. Bank of Japan Research Paper
Investors are increasingly attracted to Japanese hedge funds due to their unique ability to cope with volatility and outperform long-only equity markets in Japan. To gain insights into the performance of Japanese hedge funds, especially for 2018, it is recommended to consult specialized hedge fund industry reports or databases like Hedge Fund Research or Preqin.
Taking a constructive view, the author advocates for a higher allocation of investments in Japanese hedge funds compared to other hedge funds, especially as they continue to be a key player in the global hedge fund landscape.
