New | Japan US$2 trillion fund looks to buy smaller hedge funds in Asia

After struggling to attract money, smaller Asian hedge funds may be about to get some relief, courtesy of a US$2 trillion Japanese asset manager.

Japan Post Bank Co.’s investment division is considering backing smaller or newly created Asian hedge funds as it seeks higher returns, said Naohide Une, managing director of the unit that oversees hedge fund allocations. To start with, the bank plans to work with no more than five asset managers or so-called gatekeepers to select funds to invest in, he said.

“There are extremely talented emerging managers in Asia who are having trouble raising money. It is an opportunity for us from the viewpoint of returns,” Une said in an interview in Tokyo. “This opportunity won’t be around forever, so we would like to start putting something together sooner rather than later.”

The regional hedge fund industry could use a deep-pocketed backer.

Investors withdrew $6.3 billion from Asia-based hedge funds in the first six months, cutting assets by about 10 per cent and making them the worst-hit among global peers, according to eVestment, an Atlanta, Georgia-based data provider. The Eurekahedge Asian Hedge Fund Index is on track for its first decline since 2011, down 0.4 per cent this year to July.