Japanese hedge fund performance 'not affected by credit market crisis'

Added: (Mon Sep 03 2007)

Pressbox (Press Release) - Worldwide credit market turbulence will have a restricted impact on Japanese hedge fund performance, it has been reported.

According to Kirby Daley, an advisor for investors at Societe Generale SA's Fimat unit in Hong Kong, Japanese hedge funds largely avoid investing in debt.

It is this practice that has seen two Bear Stearns funds collapse following over-exposure to the home loan market for Americans with poor credit histories.

"The funds that have imploded to this point have largely been credit funds that had large short exposure, or direct exposure to subprime loan derivatives on the long side,'' Mr Daley told Bloomberg.

"Japanese hedge funds tend to be equity long-short funds.''

Despite this, the performance of Japanese hedge funds is still subdued compared with overseas competitors, highlighted by the fact that the Eurekahedge Japan Hedge Fund Index has fallen by 0.4 per cent every month as of July 31st since December 2005.

By comparison, the Eurekahedge Global Absolute Return Fund Index has posted returns of 38 per cent in the same period.