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<p>Driven by sovereign wealth funds, investors have stepped up their allocations to hedge funds in the Asia Pacific region to reach $202 billion as of the end of 2016, up from $180 billion a year earlier.</p></article>

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<p>Driven by sovereign wealth funds, investors have stepped up their allocations to hedge funds in the Asia Pacific region to reach $202 billion as of the end of 2016, up from $180 billion a year earlier.</p>
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<p>Asia-Pacific continues to grow in regards to both the number of investors actively investing in hedge funds as well as the size of their portfolios. There are 587 institutional investors in the region collectively investing an estimated $202 billion in hedge funds, according to a<span style="color: #000080;"><strong><a style="color: #000080;" href="https://www.preqin.com/docs/reports/Preqin-Special-Report-Hedge-Funds-in-Asia-Pacific-July-2017.pdf" target="_blank" rel="noopener noreferrer"> recent report</a></strong></span> by UK-based research firm <span style="color: #000080;"><strong><a style="color: #000080;" href="http://dealstreetasia.com/tag/preqin" target="_blank" rel="noopener noreferrer">Preqin</a></strong></span>.</p>
<p>This is contrast to North America and Europe where 2016 saw a greater proportion of investors indicate they were seeking to draw back from hedge funds.</p>
<p>“The Asia-Pacific hedge fund industry is becoming an increasingly important part of the global landscape. Regulatory changes and increasing institutionalisation in the region is exposing growing numbers of countries and investor types to opportunities in hedge funds. Investors, in turn, are allocating increasing amounts of capital to the industry, an increase of over $20 billion in 2016 alone,&#8221; said Amy Bensted, Head of Hedge Fund Products at Preqin.</p>
<p><a href="https://media.dealstreetasia.com/uploads/2017/07/preqin-hedge-funds.png"><img loading="lazy" decoding="async" class="alignnone wp-image-79114" src="https://media.dealstreetasia.com/uploads/2017/07/preqin-hedge-funds.png?resize=640,292" alt="" srcset="https://media.dealstreetasia.com/uploads/2017/07/preqin-hedge-funds.png?w=1182 1182w, https://media.dealstreetasia.com/uploads/2017/07/preqin-hedge-funds.png?resize=300,137 300w, https://media.dealstreetasia.com/uploads/2017/07/preqin-hedge-funds.png?resize=768,350 768w, https://media.dealstreetasia.com/uploads/2017/07/preqin-hedge-funds.png?resize=1024,467 1024w" sizes="(max-width: 800px) 100vw, 800px" data-recalc-dims="1" /></a></p>
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<p>Sovereign wealth funds accounted for 54 per cent of capital invested in hedge funds by Asia-Pacific-based investors, while asset managers formed 10 per cent of the pie. These were followed by private sector pension funds and insurance companies, which accounted for 8 per cent each of the total capital.</p>
<p>Several investors in the region, particularly in South Korea, made their maiden investments in the asset class in 2016.</p>
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<p><a href="https://media.dealstreetasia.com/uploads/2017/07/apac-hedge-funds.png"><img loading="lazy" decoding="async" class="aligncenter wp-image-79115" src="https://media.dealstreetasia.com/uploads/2017/07/apac-hedge-funds.png?resize=640,518" alt="" srcset="https://media.dealstreetasia.com/uploads/2017/07/apac-hedge-funds.png?w=998 998w, https://media.dealstreetasia.com/uploads/2017/07/apac-hedge-funds.png?resize=300,243 300w, https://media.dealstreetasia.com/uploads/2017/07/apac-hedge-funds.png?resize=768,622 768w" sizes="(max-width: 650px) 100vw, 650px" data-recalc-dims="1" /></a></p>
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<p>Some of the prominent contributors to hedge funds in the region include sovereign funds such as Singapore’s GIC, which allocated $10.5 billion to hedge funds, Australia’s Future Fund ($14.8 billion) and the China Investment Corporation that invests an estimated $30.8 billion in hedge funds.</p>
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<p>&#8220;Although the capital flowing to hedge funds from Asia-Pacific institutions 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. Given the size of the economies of China and India, as these financial markets become more sophisticated it may give a significant boost to the industry in the region,” Bensted said.</p>
<p>While Australia has the largest number of hedge fund investors in the region, Singapore-based institutions have the highest average allocation to hedge funds, at 14.1 per cent of their assets.</p>
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<p><a href="https://media.dealstreetasia.com/uploads/2017/07/apac-active-investors.png"><img loading="lazy" decoding="async" class="alignnone size-full wp-image-79116" src="https://media.dealstreetasia.com/uploads/2017/07/apac-active-investors.png?resize=640,210" alt="" srcset="https://media.dealstreetasia.com/uploads/2017/07/apac-active-investors.png?w=1778 1778w, https://media.dealstreetasia.com/uploads/2017/07/apac-active-investors.png?resize=300,98 300w, https://media.dealstreetasia.com/uploads/2017/07/apac-active-investors.png?resize=768,252 768w, https://media.dealstreetasia.com/uploads/2017/07/apac-active-investors.png?resize=1024,336 1024w" sizes="(max-width: 1778px) 100vw, 1778px" data-recalc-dims="1" /></a></p>
<p>Home to $63 billion of hedge fund assets under management (AUM) and 368 fund managers, Hong Kong is seen as the centre of the hedge fund industry in Asia- Pacific region. Globally, it stands the third terms of hedge fund capital managed, behind the US and the UK.</p>
<p>With $30 billion of assets under management, Australia stands second in the region with 124 hedge fund managers and 185 institutional investors active in hedge funds.</p>
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<p>China has the third largest hedge fund industry in Asia-Pacific with assets of around $19 billion. According to the Preqin report, ease in the regulatory environment within China is allowing more possibilities for hedge funds and it has the potential to eclipse both Hong Kong and Australia in the future.</p>
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<p>Over 180 hedge fund managers reside in Singapore running assets approaching $18 billion, making it the fourth largest in the region. Singapore&#8217;s $350 billion sovereign wealth fund GIC is among the 10 largest investors in hedge funds globally. It currently invests upwards of $10.5 billion in hedge funds, with one of its most recent investments in newly founded Singapore-based Lauro Asset Management. There are a further 63 institutions in Singapore that actively invest in hedge funds, showed the Preqin report.</p>
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<p>The Indian hedge fund industry is relatively small, according to Preqin with 41 managers collectively controlling $1.2 billion in capital. More than half of all of the institutional investors tracked by Preqin in India fall into the category of institutional private wealth; family offices and wealth managers collectively represent almost 60% of all investors in the country tracked by Preqin.</p>
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Driven by sovereign wealth funds, investors have stepped up their allocations to hedge funds in the APAC region to reach $202 billion as of the end of 2016.

Sovereign funds drive up allocations to hedge funds in Asia Pacific

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