Preqin: Asia-Pac Institutional Investors Increase Hedge Fund Investments by 12% in 2016

While some North American and European investors were drawing back on hedge fund allocations, Asia-Pacific-based institutional investors allocated $202 billion in hedge fund-based capital as of the end of 2016, according to a study from Preqin.

This allocation is up 12.2% from 2015’s $180 billion.

Tracking 588 institutional investors in the region, Preqin found that Australia (185 investors), Japan (118 investors), and Hong Kong (92 investors) contain the largest amount of hedge fund investors. The highest average hedge fund allocations came from Singapore-based institutions at 14.1% of their assets, with Hong Kong- and Japan-based investors at 13.9% and 13%, respectively.

The bulk of these investments came from sovereign wealth funds, which account for 54% of hedge fund-invested capital from the region. The China Investment Corporation leads with an estimated $30.8 billion in hedge fund investments, while Australia’s Future Fund allocates $14.8 billion, and Singapore’s GIC allocates $10.5 billion. The next-largest proportions are attributed to asset managers (10%), private sector pension funds (8%), and insurance companies (8%).

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“Although the capital flowing to hedge funds from Asia-Pacific institutions is currently driven by sovereign wealth funds, there are signs that the industry’s appeal is attracting an increasingly diverse range of investors,” Amy Bensted, Preqin’s head of hedge fund products, said in a statement. “In particular, it will be interesting to see if investors in emerging Asian economies will become more involved with the asset class. Given the size of the economies of China and India, as these financial markets become more sophisticated, it may give a significant boost to the industry in the region.”

This comes at a time where North American and European allocation trends are moving in the opposite direction, with a larger proportion of investors seeking to draw back from hedge funds at the end of 2016, according to the report. In addition, private equity real estate is also seeing a resurgence, bouncing back in Q2 2017 from a rocky Q1.

Tags: Asia-Pac, Hedge Funds, Preqin

The US ranks 17^thamong 43 countries on a 2017 index of retiree wellbeing across developed countries put together by Natixis Global Asset Management, sliding down from its number 14 rank for 2016.

The Boston asset management firm bases its rankings on 18 measures of retiree welfare across the four broader aspects of finances, health, material wellbeing, and quality of life.

The top-10 ranked countries on the Natixis retiree wellbeing index for 2017 include (in order of ranking) Norway, Switzerland, Iceland, Sweden, New Zealand, Australia, Germany, Denmark, the Netherlands, and Luxembourg.

The factors that impacted the US’s ranking are:

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The US ranks only 30^th for life expectancy, even as it spends more per person on healthcare than any other country on the index, suggesting it is not getting a good return on the money spent.

Although the country’s income per capita is fifth-highest, it has the sixth-lowest rank for income equality. This implies that many Americans are not participating in economic growth and could find saving for retirement a challenge.

American retirees face a lower quality of life and decline in happiness levels, which was somewhat offset by an improvement in environmental factors, including cleaner air.

Banks’ non-performing loans and levels of federal debt have improved compared to the other nations, landing the US in the top 10 for finances. Offsetting this was the high levels of public debt as a portion of GDP, as well as the rising proportion of retirees compared to working-age adults, which pressures welfare programs such as Social Security and Medicare. Low interest rates and tax pressures also impact retirement income and savings rates.

“This year’s global retirement index is an important reminder that retirement security is a complex, multi-dimensional issue that is vastly influenced by a nation’s policies, politics, and economics,” said Ed Farrington, executive vice president of retirement for Natixis Global Asset Management.

He added, “The population is getting older, making retirement security one of the most pressing social issues facing the world. Factors such as increasing longevity, income inequality, and the impact of monetary policy on personal savings and pension liabilities, are challenging the long-standing assumptions about how Americans plan for and live in retirement.”

Tags: Natixis Global Asset Management, Research, Retirement, US

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