The Asian hedge fund industry resumed strong capital growth in Q4 2014 at a record level of capital. Total capital managed by the Asian hedge fund industry stood at $119.75bn at year end, including an increase of $2.3bn for Q4 1014, according to the latest HFR Asian Hedge Fund Industry Report.

For the full year, the Asian hedge fund industry posted an increase in capital of $7.4bn on global inflows of $3.8bn, this compared to a capital increase of $24bn on $10.5bn inflow in 2013.

“Asian hedge funds were well-positioned for the global currency and commodity markets dislocations of the past few months, while at the same time, Asian hedge funds have also been the beneficiaries of a strong relative performance and positive decoupling of regional equity markets, both of which have contributed to Asian hedge fund gains in recent months,” said Kenneth J Heinz, president of HFR.

“As the composition of the Asian hedge fund industry continues its powerful evolution toward that of the global industry, hedge funds are increasingly using innovative strategies to access opportunities created by increased financial market globalization and integration. Asian hedge funds executing on these sophisticated strategies are likely to drive strong and continued expansion of the Asian hedge fund industry in 2015.”

India led Asian hedge fund performance. The volotile HFRI EM: India Index gained 5.4% in Q4 and an impressive 44.4% for 2014, leading all regional indices globally. The gain for the HFRI EM: India Index was the second highest since inception (2009: 56.2%) and topped Indian equities by over 1,400bp. 

The HFRI EM: China Index also posted a strong increase of 4.6 percent in Q4, completing a gain of 5.7% for 2014, which trailed strong gains of Chinese equities in both Q4 and the whole of 2014. The HFRX Japan Index gained 5.2% for 2014, narrowly trailing the gain of Japanese equities.

Investor capital inflows in Asian hedge funds for both Q4 and 2014 were led by equity hedge strategies, which received inflows of $1.2bn in Q4 and $2.1bn for 2014. However, event-driven hedge funds located in Asia, which execute in distressed and shareholder activist strategies, led the performance by strategy with these posting a gain of 11.5% for 2014, topping the muted gain of one percent for the HFRI Event Driven Index. 

Asian-located macro hedge funds, which actively invest across currency, commodity, fixed income and equity markets returned 5.5% for 2014, in line with full year gain for the HFRI Macro Index. Capital flows by region in Q4 were led by Japanese focused funds, with inflows of $960m; for the whole of 2014, Asian inflows were led by funds focused on Emerging Asia, with inflows of $3.45bn for 2014.