Sometimes success can be found in the unlikeliest of places. For some of the top-performing hedge funds in Asia in 2016, the key to success lied in commodities-related bonds that dipped in price in the first quarter of the year. In the midst of a difficult climate for Asian funds, with volatile market fluctuations in China and Japan causing many of the usual top players to falter, a few firms managed to prosper in 2016. Overall, though, Asian firms are lagging behind peers around the globe for the first time in about five years. While Asia's funds have managed to return only 0.8% in the first 11 months of 2016, the best performing firms have beat that trend.

BFAM's Asian Opportunities Master Fund

BFAM managed to gain about 16% in the first 11 months of the year, according to a Bloomberg report. That leaves the fund with just over $2 billion in assets. The gains largely came from credit trades focused on distressed commodities bonds from the first quarter. In the remainder of the year, the prices on these bonds have rebounded, leading BFAM to success. The remainder of the positive returns is mostly due to trades on debt restructuring of the Chinese property developer Kaisa Group Holdings and a sell-off of credit default swaps, as well as volatility trades surrounding the U.K.'s Brexit vote and the U.S. presidential election.

Serica

Serica's credit-focused fund also managed to bring in positive returns this year, posting a 30% gain in the first 11 months. In Serica's case, this performance was mostly thanks to a rebound in price for bonds in Indonesia and resources investments, as well as distressed credit trades throughout the year.

LIM Asia Special Situations Fund

LIM's Asia Special Situations Fund brought in returns of 10% this year, and while this level would not typically be noteworthy in the hedge fund world, in recent years and in comparison with broader trends this constitutes a major success. LIM focused on high-yield bonds in commodities, picking up a profit as those bonds surged in price after the beginning of the year.

OCP Asia's Orchard Landmark Fund

OCP Asia saw significant returns for its $1 billion Orchard Landmark Fund, bringing in about 13% through November of 2016. The firm focuses on direct loans to smaller companies in the Asia-Pacific region.

 

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