Asia-Pacific Hedge Funds

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Content Includes: Preqin Special Report: Asia-Pacific Hedge Funds

Overview of Asia-Paciﬁ c March 2015 Hedge Funds

New regions for investment are emerging amid a changing economic and regulatory landscape.

Overview of Asia- Paciﬁ c Hedge Fund Performance

Performing better than hedge funds globally following economic growth in region.

Institutional Investors in Asia-Paciﬁ c

A look at the region’s diverse range of active investors in hedge funds.

Asia-Paciﬁ c-Based Investors’ Outlook on Hedge Funds

What do investors look for in fund managers in 2015? Did hedge funds meet their expectations in 2014?

alternative assets. intelligent data. Download the data pack: Preqin Special Report: Asia-Pacific Hedge Funds www.preqin.com/HFAsia15

The Asia-Pacific Opportunity

Asia-Paciﬁ c as a destination for hedge fund management has been expanding rapidly over the past few years; over 2014 alone industry assets in the region grew by almost 30%. Much of this growth has been driven by the growing base of institutional investors in the region, from large sovereign wealth funds through to small local pension schemes, that have increasingly begun to turn to hedge funds to help meet portfolio liabilities and long-term investment objectives. Recent regulatory reforms that have swept across the region have enabled both fund managers and investors alike to ramp up their activity in the hedge fund space, and this rapid growth is expected to continue over the next few years as more regions for hedge fund activity emerge within Asia-Paciﬁ c.

In this report we look at the state of the hedge fund industry in Asia-Pacifi c by examining both local funds and those from beyond its shores investing in the region. We also take a closer look at investors from Asia-Pacifi c using data taken from Preqin’s award-winning Hedge Fund Investor Profi les online service and the results of investor interviews carried out at the end of 2014.

Top Five Leading Centres for Hedge Funds in Asia- Asia-Pacific-based Pacific (by AUM) hedge funds represent

Japan $10bn

$145bn South Korea in assets under Hong $5bn Kong management $61bn

Singapore $29bn

Rest of Asia- Pacific $5bn

2,213 Australia hedge funds are $36bn based in Asia-Pacific

Asia-Pacific-focusedA hedgeh funds have delivered annualized returns of 556 11.91% Asia-Pacific-based over the past institutional investors three years invest in hedge funds Contents

Overview of Asia-Pacific Hedge Funds ...... 3

Overview of Asia-Pacific Hedge Fund Performance ...... 5

Institutional Investors in Asia-Pacific ...... 7

Asia-Pacific-Based Investors’ Outlook on Hedge Funds ...... 8

Overview of Asia-Pacific Hedge Funds

Asia-Pacific, as a centre for hedge funds, is expanding rapidly. Australia, Singapore and Hong Kong lead the way as the principal financial centres in the region; however, new regions for hedge fund investment have emerged over the past five years as a result of a changing economic and regulatory landscape. In this section we examine the industry within Asia- Pacific, and take a closer look at hedge funds located outside its borders but with a focus on investment in the region.

Asia-Pacific Adds $33bn in 2014 Fig. 1: Hedge Fund Manager Assets under Management by Region As of 31 December 2014, Asia-Pacifi c-based hedge funds represented $145bn of the $3.02tn in global industry assets (Fig. Region Assets under Management ($bn) 1). The Asia-Pacifi c hedge fund industry is growing rapidly; from 2013 to 2014, the industry accumulated an additional $33bn in North America 2,198 capital, a 29% growth over the 12 months ending 31 December Europe 609 2014. Asia-Pacifi c 145 Hong Kong, Australia and Singapore Are the Established Rest of World 67 Centres for Hedge Funds in Asia-Pacific Total 3,020

Fig. 2, taken from the 2015 Preqin Global Hedge Fund Report, Source: 2015 Preqin Global Hedge Fund Report shows the leading 10 countries globally in terms of the assets under management of the hedge funds based in that region. Fig. 2: Breakdown of Hedge Fund Manager Assets under Three countries within Asia-Pacifi c – Hong Kong, Australia and Management by Country Singapore – are in this group of leading locations for hedge fund management, with Hong Kong representing the larger amount of Firm Headquarter Location Assets under Management ($bn) assets ($61bn). In fact, the combined assets of the funds within US 2,154 Singapore, Australia and Hong Kong represent 87% of all assets in Asia-Pacifi c-based hedge funds. The largest hedge fund manager UK 413 in the region, Platinum Asset Management, is based in Australia Jersey 62 (Fig. 4). In fact, nine of the 10 largest fund managers in Asia- Pacifi c are based in either Singapore, Hong Kong or Australia. Hong Kong 61 Brazil 51 Asia-Pacifi c-based hedge fund managers account for 65% of all Sweden 39 hedge fund managers in the industry that manage Asia-Pacifi c- focused hedge funds. Of the remaining 35%, groups outside the Australia 36 region which run funds focused on the region, more than half are Canada 31 based in North America (56%), with 42% headquartered in Europe and 2% in Rest of World (Fig. 5). Singapore 29 France 25 Equity Strategies Dominate the Asia-Pacific Hedge Fund Source: 2015 Preqin Global Hedge Fund Report Landscape

Equity-based hedge fund strategies are the most commonly Fig. 3: Breakdown of Asia-Pacific-Based Hedge Fund utilized strategy among fund managers with a focus on Asia- Managers by Location Pacifi c; 62% of funds based within Asia-Pacifi c utilize an equity- based approach, and 55% of funds investing in Asia-Pacifi c from 1% other regions also invest primarily as an equity strategy (Fig. 6). 1% Fund managers investing in Asia-Pacifi c from beyond the region 3% 1% Hong Kong 3% are more likely to employ a macro strategy when investing in the 1% Singapore 5% region compared to local funds. Australia

8% 38% Japan Eighty-six percent of Asia-Pacifi c-focused hedge fund vehicles China managed by local managers are structured as single-manager hedge funds (Fig. 7). However, fund managers investing in India the region from beyond its borders employ a greater variety of South Korea structures when investing in Asia-Pacifi c. Seventeen percent 15% New Zealand of non-Asia-Pacifi c-based fund managers invest in the region Malaysia through fund of hedge funds products; these funds are a key Thailand way for investors from outside Asia-Pacifi c to gain exposure 23% Other to these markets through a fund which may be managed from the US or Europe. The regulatory European UCITS wrapper is another product used by managers from beyond Asia-Pacifi c to create hedge fund products investing in the region; 12% of funds Source: Preqin Hedge Fund Analyst investing in Asia-Pacifi c from outside the region are structured as UCITS funds.

Local Funds Outnumber their Global Counterparts (please see the 2015 Preqin Global Hedge Fund Report for more details). Until 2005, it was predominantly funds from outside Asia- Fig. 8 shows the number of funds launched each year with a Pacifi c that were launched to focus on the region; however, from focus on Asia-Pacifi c. The region showed signifi cant growth as a this year onwards, there was a rapid proliferation of funds based destination for hedge fund investment from 2005, reaching a high in the region investing in local markets. In 2004, 47% of all Asia- of 186 Asia-Pacifi c-focused fund launches in 2010. The number Pacifi c-focused hedge funds launched were managed by Asia- of fund launches with a focus on the region fell in 2013 and 2014; Pacifi c-based managers; this share jumped to 74% in 2014. this is a trend that has been seen on a global basis, with fewer funds being launched in these years than at the start of the decade

Fig. 4: Largest Asia-Pacific-Based Hedge Fund Managers by Assets under Management

Manager Location Year Established Assets under Management Platinum Asset Management Australia 1994 $20.7bn as at 31 December 2014 Value Partners Hong Kong 1993 $12.9bn as at 31 December 2014 Hillhouse Capital Management Singapore 2005 $7.8bn as at 31 March 2014 Dymon Asia Capital Singapore 2008 $4.5bn as at 1 January 2015 Macquarie Investment Management Australia 2003 $3.8 as at 31 October 2014 Myriad Asset Management Hong Kong 2011 $3.8bn as at 1 January 2015 SPARX Asset Management Korea South Korea 1999 $3.2bn as at 31 January 2015 Prime Capital Management Hong Kong 2004 $3.0bn as at 30 November 2014 Turiya Capital Hong Kong 2010 $3.0bn as at 31 December 2014 Orchid Asia Group Management Hong Kong 1993 $2.8bn as at 31 December 2014

Source: 2015 Preqin Global Hedge Fund Report Fig. 5: Breakdown of Asia-Pacific-Focused Hedge Funds Managed by Firms Headquartered Outside the Region Fig. 6: Breakdown of Asia-Pacific-Focused Hedge Funds Split by Location (Proportion of Firms) by Core Strategy

100% 0% 2% 8% 8% Niche Strategies 90% 2% 10% 11% 80% Multi-Strategy 6% 5% 70% 7% 7% North America 6% Relative Value 60% 12% Strategies 50% Credit Strategies 42% Europe 40% Event Driven 56% 30% 62% Rest of World 55% Strategies 20% Macro Strategies 10% Equity Strategies

Proportion of Asia-Pacific-Focused Funds 0% Asia-Pacific-Based Asia-Pacific-Focused Hedge Funds Hedge Funds from Outside the Region

Source: Preqin Hedge Fund Analyst Source: Preqin Hedge Fund Analyst Fig. 7: Breakdown of Asia-Pacific-Focused Hedge Funds by Structure Fig. 8: Asia-Pacific-Focused Hedge Fund Launches

100% 2% 1% 2% 200 2% 3% 90% 7% 12% Managed 180 Account - FoHF Asia-Pacific- 80% 3% 160 Focused 64 Listed Funds 68 79 Hedge Funds 70% 17% 140 82 60 from Outside 57 the Region 60% UCITS 120 76 83 55 31 50% 100 86% 40% Managed 80 Asia-Pacific- Account - Direct 49 114 Based Hedge 64% 60 120 30% 41 107 Funds Commingled FoHF 55 10096 No. of Fund Launches 31 106 90 20% 40 79 78 78 19 20 44 10% Commingled 20 21 34 24 20 28 Direct 11 14 0% 0

Proportion of Asia-Pacific-Focused Funds Asia-Pacific-Based Asia-Pacific-Focused

Hedge Funds Hedge Funds from 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Outside the Region Pre 1999 Year of Fund Launch Source: Preqin Hedge Fund Analyst Source: Preqin Hedge Fund Analyst 4 © 2015 Preqin Ltd. / www.preqin.com Download the data pack: Preqin Special Report: Asia-Pacific Hedge Funds www.preqin.com/HFAsia15

Overview of Asia-Pacific Hedge Fund Performance

Riding on the wave of economic growth in the region, Asia-Pacific-focused hedge funds have generally performed better than other hedge funds globally. This is especially so for managers based in Asia-Pacific, which tended to do significantly better than managers based outside the region as they leverage their local knowledge.

Asia-Pacific-focused funds managed by Asia-Pacific-based managers also tend to provide better risk-adjusted returns than all other hedge funds and significantly greater risk-adjusted returns than Asia-Pacific-focused hedge funds managed by managers based outside the region.

Asia-Pacific Hedge Funds Outperform their Global Fig. 9: Performance of Asia-Pacific-Focused Hedge Funds Counterparts vs. All Hedge Funds

Preqin’s Hedge Fund Analyst shows that hedge funds focusing on 14% Asia-Pacifi c outperformed the Preqin All-Strategies Hedge Fund 11.91% benchmark in 2014, as well as over a two-, three- and fi ve-year 12% 11.60% basis (Fig. 9). 10% 8.88% Asia-Pacific- 8.44% 7.93% Focused Fig. 10 shows the rolling 12-month returns of hedge funds based 8% 7.74% on the regional focus of the fund. Asia-Pacifi c-focused hedge Hedge Funds funds outperformed hedge funds focused on other regions for the 6% 5.46%

years ending December 2013 and December 2014. The impact Net Returns All Hedge 3.78% Funds of the US Federal Reserve beginning tapering its QE programme 4% 2.17%2.18% in December 2013 led to some of the drop in performance at 2% the start of 2014, as currencies and stock markets in emerging markets fell steeply as investors prepared for US interest rates to 0% rise, but markets subsequently rebounded as interest rates stayed low. Equity markets in countries within Asia-Paciﬁ c such as India 2014 (28 Feb) 2015 YTD and China led to stronger performance at the end of 2014. One 2-Year 3-Year 5-Year

example of such a fund is the Alchemy India Long-Term Fund, Annualized Annualized Annualized managed by Singapore-based Alchemy Investment Management Source: Preqin Hedge Fund Analyst which produced a 60.60% net return for the year 2014 and has a 12-months trailing Sharpe ratio of 2.87 (Fig. 14). in Asia-Pacifi c, due to concerns about risk, may start to look at these funds in greater numbers for their ability to meet portfolio The higher returns of Asia-Pacifi c funds have, for most of the objectives over long time frames. past fi ve years, been accompanied by increased volatility (Fig. 11). However, the volatility of Asia-Pacifi c-focused hedge funds When looking at hedge fund returns on a risk-adjusted basis, has decreased signifi cantly since November 2013, and as of we can see that Asia-Pacifi c-focused funds typically had a lower January 2015, it has become the category with the least volatility. Sharpe ratio than all hedge funds as a whole until October 2014 As a result of smaller fl uctuations in performance over 2014, (Fig. 12). The combined effect of stronger performance over most compared to other regions globally, the 12-month volatility for timeframes, and a drop in the amount of volatility exhibited by Asia-Pacifi c-focused hedge funds stands at 2.76% (31 January funds in the region, has led to Asia-Pacifi c-based funds, managed 2015). As markets within the region continue to mature, and if fund by fund managers located in the region, moving ahead of their all managers are able to successfully produce robust and consistent hedge funds counterparts, in terms of Sharpe ratio, since the end returns, investors which may remain cautious about investment of 2014.

Fig. 10: Rolling 12-Month Returns of Hedge Funds by Fig. 11: Rolling Volatility of Hedge Funds by Regional Focus, Regional Focus, January 2010 - January 2015 January 2010 - January 2015

50% 12%

10% 40% Asia-Pacific Asia-Pacific 8% 30% Europe Europe

North America 6% North America 20% Rest of World Rest of World 4% All Hedge Funds 10% 12-Month Volatility

12-Month Returns All Hedge Funds 2%

0% 0% Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14

-10% May-10 May-11 May-12 May-13 May-14 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14 Oct-10 Oct-11 Oct-12 Oct-13 Oct-14

Source: Preqin Hedge Fund Analyst Source: Preqin Hedge Fund Analyst 5 © 2015 Preqin Ltd. / www.preqin.com Download the data pack: Preqin Special Report: Asia-Pacific Hedge Funds www.preqin.com/HFAsia15

Local Knowledge Has Led to Strong Performance Outlook

Fig. 13 shows a comparison between the performance of Asia- Interest in Asia-Pacifi c as a destination for investment has been Pacifi c-focused hedge funds based in the region and Asia-Pacifi c- growing in recent years, with both investors and fund managers focused hedge funds that are managed by fi rms headquartered within the region and beyond seeing profi table trading opportunities outside the region. Preqin’s data shows that over the past six there. years, hedge funds based in Asia-Pacifi c have posted higher returns than their counterparts outside the region. In fact, in 2009, A favourable macro environment, increased options for investment, 2012, 2013 and 2014, Asia-Pacifi c-focused hedge funds based as well as countries such as Japan, China and India implementing in the region outperformed their peers based overseas by more expansionary fi scal and monetary policies in order to jump start than two times. In 2011, the only year of negative performance economic growth, has led to increased opportunities and appetite over the past six years, the losses for both these categories were for fund managers to launch funds focused on the Asia-Pacifi c both similar (-7.50% for funds based in Asia-Pacifi c, and -6.86% region. for funds based outside the region). Preqin’s data shows that funds investing in Asia-Pacifi c have been When looking at risk-adjusted returns, funds that focus on Asia- able to generate returns above the Preqin-All Strategies Hedge Pacifi c, that are run by managers from beyond its borders, have Fund benchmark over recent years. Fund managers based in shown a divergence in terms of rolling three-year Sharpe ratio since Asia-Pacifi c’s borders have been particularly successful, and the the middle of 2013 from fund managers investing in Asia-Pacifi c local knowledge of the markets in the region has enabled them that are also based there (Fig. 12). This suggests that Asia-Pacifi c- to generate both higher returns, and better risk-adjusted returns, based managers are best placed to generate strong returns, on a than their counterparts investing from beyond the region. risk-adjusted basis, amid burgeoning markets caused by regional economic developments.

Fig. 12: Rolling Sharpe Ratio of Asia-Pacific-Focused Hedge Funds vs. All Hedge Funds, January 2012 - January Fig. 13: Performance of Asia-Pacific-Based Hedge Funds 2015 vs. Asia-Pacific-Focused Hedge Funds

2.5 50% 44.33%

2.0 40% Asia-Pacific-Based Asia-Pacific- Hedge Funds 30% Based Hedge 1.5 Funds 21.16% Asia-Pacific-Focused 20% 15.10% Asia-Pacific- 1.0 Hedge Funds from 14.27% 14.04% Focused Outside the Region 10.17% 10% 9.20% Hedge Funds 7.25% 5.96% Net Returns from Outside All Hedge Funds 3.70% 0.5 1.71% the Region 0% 0.97% Three-Year Sharpe Ratio Three-Year 2009 2010 2011 2012 2013 2014 2015 0.0 -6.86% YTD -10% -7.50% (31 Jan) Jul-12 Jul-13 Jul-14 Apr-12 Apr-13 Apr-14 Jan-12 Jan-13 Jan-14 Jan-15 Oct-12 Oct-13 -0.5 Oct-14 -20%

Source: Preqin Hedge Fund Analyst Source: Preqin Hedge Fund Analyst

Fig. 14: Top Five Performing Asia-Pacific-Based Hedge Funds in 2014

Fund Manager Core Strategy Net Return Alchemy India Long-Term Fund Alchemy Investment Management Long/Short Equity 60.60% Merchant Commodity Fund RCMA Asset Management Commodities 59.29% Redart Focus Fund Redart Capital Long/Short Equity, ValueOriented 57.45% ArthVeda Alpha India L50 ArthVeda Fund Management Long Bias 39.09% AFC Asia Frontier Fund - CHF-A Asia Frontier Capital Long Bias 36.98%

Source: Preqin Hedge Fund Analyst

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Institutional Investors in Asia-Pacific

Within Asia-Pacific there is a diverse range of institutional Fig. 15: Breakdown of Asia-Pacific-Based Hedge Fund investors actively investing in hedge funds, from large Investor Universe by Investor Type sovereign wealth funds such as China Investment Corporation investing billions of dollars in the asset class Superannuation through to small family offices and investment companies. Scheme Using data taken from Preqin’s Hedge Fund Investor Profiles 9% Fund of Hedge Funds 18% Manager database, we present some key facts about institutional 3% Private Sector Pension investors based in Asia-Pacific, from who these investors are 3% Fund Asset Manager and where they are based, through to their allocation to the 8% asset class and investment plans for 2015. Family Office 14% Data Source: 8% Insurance Company Wealth Manager Preqin’s Hedge Fund Investor Profi les is the industry’s 11% Bank leading source of intelligence on institutional investors in 13% hedge funds and features detailed profi les for over 4,800 Public Pension Fund investors worldwide, including 556 Asia-Pacifi c-based 13% investors. Other

For more information, please visit: www.preqin.com/hfip Source: Preqin Hedge Fund Investor Proﬁ les

Fig. 16: Breakdown of Institutional Investors Based in Asia- Fig. 17: Mean Allocations of Asia-Pacific-Based Investors to Pacific by Investor Location Hedge Funds by Investor Type, 2013 - 2015

18% 17.0% 17.0% 16% 15.2% 13.9% 14.5%14.4% 14.2% 13.9% 13.2% 2% 3% 14% 14.0% 13.1% 3% Australia 12.0% 13.4% 11.7% 3% 12% 11.7% 11.0% Japan 10% 10.5% 31% 8.0% 8% Hong Kong 8% 6.5% 6% 5.8% 4.3% Singapore 4% 5.3% 4.2% 3.5% South Korea 2% 11% New Zealand 0% Mean Current Allocation to Hedge Funds as a % of AUM China Office Family

India Asset Plan Wealth Manager Manager 15% Fund Sovereign

Rest of Asia-Pacific Foundation Endowment Wealth Fund Pension Fund

24% Private Sector Public Pension Investor Type

2013 2014 2015

Source: Preqin Hedge Fund Investor Proﬁ les Source: Preqin Hedge Fund Investor Proﬁ les

Fig. 18: Regional Preferences of Asia-Pacific-Based Fig. 19: Strategic Preferences of Asia-Pacific-Based Investors in Hedge Funds Investors in Hedge Funds

80% 70% 73% 61% 60% 70% 66% 64% 50% 45% 45% General 60% 41% Preference 40% 33% 32% 32% 50% 28% General 30% 22% 27%22% 2015 40% Preference 20% 18% 18% 40% 20% 18% Mandates 33% Based Investors 12% 12% 10% 9% Investors 30% 26% 2015 Proportion of Asia-Pacific- 0% 21% Mandates 20% 15%

10% Macro Proportion of Asia-Pacific-Based Neutral Managed

0% Futures/CTA Event Driven Fixed Income Opportunistic Equity Market Global Asia-Pacific North Europe Multi-Strategy

America Long/Short Equity Long/Short Credit Regional Preferences Strategic Preferences Source: Preqin Hedge Fund Investor Proﬁ les Source: Preqin Hedge Fund Investor Proﬁ les

Asia-Pacific-Based Investors’ Outlook on Hedge Funds

At the end of 2014, Preqin interviewed over 150 institutional investors globally to find out more about their views on how hedge funds have performed in 2014 and their outlook for 2015. In this section, which contrasts the results of this study, published in the 2015 Preqin Global Hedge Fund Report, with our interviews with Asia-Pacific-based investors, Preqin examines in more detail how far hedge funds met expectations in 2014, investor attitudes towards regulation and what these investors look for in fund managers in 2015. Dissatisfaction with Hedge Funds Returns Increases, but Asia-Pacific Investors Seek Hedge Funds which Can Provide Confidence Remains Unchanged Risk-Adjusted Returns with Aligned Fees

One in two Asia-Pacifi c-based investors indicated that their hedge Investor sentiment towards hedge funds remains largely fund investments had met their expectations (Fig. 20). However, unchanged and over the course of 2015, Asia-Pacifi c-based a large proportion (43%) of investors based in Asia-Pacifi c stated institutions look set to put more money to work in the asset class. that their investments in the asset class had fallen short of their Eighty-two percent of investors in the region indicated to Preqin expectations, a higher percentage than among investors globally that they will either maintain or increase their current level of (34%). With Asia-Pacifi c-focused funds outperforming their global investment in the asset class. Despite this encouraging sign of peers in 2014, and many investors in the region investing locally, interest from the region, investors retain a cautious outlook going this could indicate that Asia-Pacifi c-based investors are looking for forwards. The risk profi le of a fund was most often cited as the higher absolute returns from their hedge funds than other investors key factor for Asia-Pacifi c investors when looking for a new fund, globally. Preqin’s performance benchmarks for Asia-Pacifi c- with the majority of investors (69%) considering it a signifi cant focused hedge funds show that these funds returned 12.7% and factor (Fig. 21). Second to risk profi le, returns, liquidity and fees 18.11% in 2012 and 2013 respectively. In contrast, similar funds were all cited as equally important factors when assessing new produced 6.01% in 2014; this relatively poor performance has not opportunities. gone unnoticed by investors.

Despite this, only a relatively small proportion of investors (14%) indicated that their conﬁ dence in hedge funds to meet portfolio expectations had decreased following a year of what many investors deemed unsatisfactory performance.

Investor Plans for Their Portfolios in 2015 118%8% 555%5% 227%7% Decrease Allocation to Keep Allocation to Hedge Funds the Same Increase Allocation to Hedge Funds Hedge Funds Asia-Pacific-Based Investors’ Change in Confidence in Hedge Funds, 2014 - 2015 114%4% 886%6% Reduced Confidence No Change In Confidence Source: Preqin Investor Interviews, November 2014

Fig. 20: Hedge Fund Portfolio Performance Relative to Expectations of Institutional Investors: Asia-Pacific-Based Fig. 21: Key Factors Used by Asia-Pacific-Based Institutional Investors vs. All Hedge Fund Investors Investors to Evaluate Hedge Fund Managers

100% 7% 8% Risk Profile 69% 90% Returns 54% Returns Have 80% Exceeded Liquidity Profile 54% 70% Expectations 50% Fees 54% 57% 60% Returns Have Met Management Experience and Background 46% 50% Expectations Established Track Record 46% 40% Source of Returns/Strategy 38% 30% Returns Have Fallen Short of Transparency of Holdings 31% 20% 43% Proportion of Respondents Expectations 35% Client Service 23% 10% Domicile 8% 0% Asia-Pacific-Based All Hedge Fund 0% 20% 40% 60% 80% Hedge Fund Investors Investors Proportion of Respondents Source: Preqin Investor Interviews, November 2014 Source: Preqin Investor Interviews, November 2014 8 © 2015 Preqin Ltd. / www.preqin.com Source new investors

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