China’s hedge funds add $200 billion, trouncing Wall Street rival

China’s hedge funds are strengthening as compared to foreign competitors with outsized gains helping them attract funds.

Macro Funds had the best results that had returns of average 41% whereas the global average was 10%. Leveraged bets on stocks benefited from the worldwide pandemic, for example, glove makers and office supplies and then to consumer stocks and vaccine makers. The top-ranked fund that returned 831% was Jianhong Absolute Return No.1.

Just 3 of the total 32 foreign firms that have a license to operate in China’s hedge fund market have garnered more than 2 billion yuan at their offshore businesses. The lack of scale also hampered foreign funds' access to markets as they weren’t able to meet brokerage requirements for assets under management.

Growth was more impressive in quant funds, as the number of local hedge fund firms with at least 10 billion yuan assets increased more than double to 63. While other foreign quant firms are attracting inflows offshore, they are struggling to win recognition onshore.

Minhong’s assets doubled last year to nearly 60 billion yuan, the largest quant fund in China. Its offshore market neutral product which also invests in China returned 32% last year, clearly beating the overall world average of 3.4%, according to Eurekahedge.