Struggling for returns

Long/short equity strategies have been the backbone of Japan’s hedge fund industry, but the country's deteriorating equity market is testing the idea of absolute returns. Saima Farooqi reports

The past year hasn’t really lived up to expectations for Japanese hedge fund managers. With the industry dominated by long/short equity strategies, many funds have struggled to match the gains realised in previous years amid a seemingly incessant slide in the country’s stock market.

With the majority of long/short funds holding a net long bias, the decline in the equity market has made the job of providing absolute returns particularly taxing, resulting for most in unimpressive returns