Asian strategy: Asia hedge funds fall from grace

After being among the top performers of 2007, Asia-focused hedge funds are suffering this year. In 2007, the HFR Asia composite hedge fund index returned more than 17%, and the Asia ex-Japan index almost 40%. Year to end-May 2008, however, the Asia ex-Japan index is down almost 10%. If investors piled in based on past performance, they will now be kicking themselves.

Ken Heinz, president of HFR, says poor performance in the Asian hedge fund industry is a result of several factors, of which declines in Asia’s equity markets and the strategy composition of the Asian hedge fund industry are both significant ones.