Tying in with other regulators across the financial world, the Securities and Futures Commission of Hong Kong conducts a survey of hedge funds in its territory every two years. The latest survey, the results of which were recently released, used the end of September 2012 as the data point to ask hedge fund managers about the size of assets managed, the sources of the firm’s capital and the investment strategies undertaken. This graphic captures the survey results:
source: Hong Kong SFC
A couple of points arise from the graphic. First, the shape of asset/manager growth amongst Hong Kong domiciled hedge fund managers reflects that of the wider industry. The timing of the surveys which were the data sources for the graphic had an impact on how it looked that the Hong Kong hedge fund industry survived the global Credit Crunch of 2008-9. March 2009 was the absolute low for risk strategies, such that the 39% y-o-y fall in AUM amongst Hong Kong hedge funds is a minor exaggeration of the perceived global trend.
The pace of recovery in assets for Hong Kong hedge funds from the low of March 2009 was slow, as investors added to brand name managers first. However the progress in the last year or two has been excellent. Over the year to September 2012 assets under management increased by 38%, as investor appetite for equity strategies improved. Over that year the Eurekahedge Asian Hedge Fund Index was up 3.77%, so that the big increase in assets was the result of proportionately large capital flows into Hong Kong based hedge funds.
The same index is up 12.7% since the end of September last year. The inference is that assets under management in the Hong Kong hedge fund industry have recovered to and passed the previous peak level of $90.1bn recorded in the first half of 2008. Again, in this regard the Hong Kong industry is simply reflecting what has happened globally.