Asia hedge funds lag behind global average

The world's fastest economic growth is not helping Asia's hedge funds.

The Eurekahedge Asian index, which tracks 395 hedge funds, returned 1.6 per cent to August 31, the worst performer among regions and about half the 3.2 per cent gain by the global benchmark.

Funds have been hampered by a concentration on Asian equities, which have been driven more by Europe's debt crisis and China's slowdown than by company fundamentals such as earnings. The MSCI Asia Pacific Index has climbed 8.2 per cent this year, compared with the 13 per cent gain by the MSCI World Index.

"Most Asian funds have been focused on the equity space and that hasn't done well," Dhawal Mehta, head of India equity investments at Reliance Asset Management said. "In the US and Europe, you have more variety in terms of the kind of funds."

This year, investors have withdrawn US$447 million from Asian hedge funds, while 73 of them have closed, according to Eurekahedge, a Singapore-based data provider.

In the region, 77 per cent of the funds are equity-related, against 46 per cent globally, Chicago-based Hedge Fund Research said.