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The AlphaWeek and Sussex Partners Japan Hedge Fund Industry Survey, 2021 Edition

Welcome to the 2021 edition of the AlphaWeek and Sussex Partners Japan Hedge Fund Industry Survey.

Last year, we set out to learn more about the Japanese hedge fund industry; specifically, how Japanese hedge fund managers feel about investor perceptions of their corner of the hedge fund world.

The genesis of the survey lies in the fascinating idiosyncrasies of the Japanese hedge fund industry when compared to the hedge fund industries of other developed nations. One of these idiosyncrasies is the relatively small number of managers based in Japan when compared to places like the US and the UK, in terms of both absolute numbers of managers and the assets they manage. When factoring in population and GDP, the numbers are starker. Another is that the structure of the Japanese equity market – equity hedge strategies comprise the vast majority of the funds managed by Japanese hedge fund managers – is favourable to fundamental, bottom-up investors due to a lack of coverage of small and mid-cap stocks and a robust framework for shorting. The number of listed companies available to trade dwarfs that of the London Stock Exchange, for example; the Japan exchange group manages five exchanges and contains 3,729 listed companies at the time of going to press.

Last year, we asked Japanese hedge fund managers whether they thought that foreign investors paid enough attention to their funds. A resounding 75% of Japanese hedge fund managers said no, they didn’t think that they did. The lack of interest is a surprise. Chief amongst reasons to allocate to hedge funds is to be able to access skill and expertise in order to outperform passive exposure to an asset class.

In the U.S. and in Europe, equity hedge funds have not outperformed passive equity exposure since before the GFC, as Patrick Ghali of Sussex Partners explains in his article which begins on page 4. In Japan, however, there is alpha to be found, as Ghali again explains.

We surveyed 22 managers for this year’s report. Some answers will surprise, some won’t, but what remains the same this year as last year is the uniqueness of the Japan hedge fund industry.

This report could not have been put together without the help of institutional hedge fund investment advisor Sussex Partners and The Consortium for Japan International Asset Management Center Promotion (JIAM), and so, to them, thank you. If you would like more information about next year’s survey, or if you have any other questions, please contact me.

Click the link below to download this year's report.

We hope you enjoy reading.

Greg Winterton

Founder, Managing Editor


November 2020

Japan Hedge Fund Industry Survey, 2021 Edition

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