The Baring Asia Hedge Select Fund, launched in May 2003 to capture the upside in rising Asian markets and preserve capital when they fall, says it has returned 18.60% over the first six-month period. BAM predicts a significant transfer of capital from the US into Asia over the next few years.
“We believe that Asia, including Japan, still offers some of the most attractive but often mispriced investment opportunities in the world,” says Tom Maier, Head of the Alternative Investment Committee at Baring Asset Management (BAM). “This is fertile ground for hedge fund managers to exploit a variety of strategies.”
BAM says that. although the characteristic volatility of the region remains, Asian economies are back on a solid footing and the ground is being prepared for a decade of superior growth and productivity, led by China. In support of this, BAM points to the strong capital flows post-SARS. The resulting excess liquidity is driving up the price of financial assets, which will eventually unleash domestic demand in an environment of local currency strength.
“The Baring Asia Hedge Select Fund, which invests predominantly in equity long-short Asia-Pacific hedge funds, is well constructed to take advantage of the price volatility associated with strong but uneven economic growth,” says Maier. “The first phase of the Asian bull market may be over, but the long-term investment case remains compelling. Although it is too early to predict a boom in Asia, there is a chance one could begin to emerge from the middle of next year. If we are right, then Asian intra-regional trade will be very strong, supported by local consumers with good purchasing power. Under these conditions, Asian financial assets may become less correlated with the more developed markets of the West. Any setback this year from profit-taking is seen as a good opportunity to add to Asian positions from developed markets.”