Interest in Asia Is Undaunted
In recent months, China has been taking measures to slow its growth trajectory. This past Friday, the country raised its bank reserve requirements for a second time in a month. This is due in part to economists’ fears of a speculative bubble. Investors, however, are reacting with indifference to these proclamations. BHA has tracked investor interest in Asia-focused hedge funds and, from the mandates received during the past six months, interest has held steady at about 20 percent. It seems investors are undaunted by the maneuvering of China’s central bank.
China, the continent’s largest economy, grew by 8.7 percent in 2009. Meanwhile, just south of China, India’s economy grew by 6.6 percent. Although there may be some evidence of a slowdown throughout the year, these healthy numbers indicate the economies were resilient enough to post solid gains despite reeling developed markets. This is one reason why investors have indicated to BHA that they believe these emerging economies can still bring strong gains to their alternative investments portfolios. For example, a wealth advisor based in Chicago said he sees great upside potential in the Asian continent for years to come and mentioned that his firm was making a long-term investment at this point.
Investors interested in Asia-focused funds include family offices and funds of funds among others. These institutional investors have mentioned their interest in event-driven, relative value, and distressed strategies specifically. They are looking not only to benefit from the potential upside inherent in the Asian markets but also from the regional diversification added to their portfolios.
Currently, there may be problems underlying the markets in Asia. However, alternative investors can benefit from the strong potential for long-term growth and the advantage of diversification. Hedge funds that focus on the Asian markets possess real opportunity even in our troubled times and remain attractive options.