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The AlphaWeek And Sussex Partners Japan Hedge Fund Industry Survey, 2023 Edition

Welcome to the 2023 edition of the AlphaWeek and Sussex Partners Japan Hedge Fund Industry Survey.

This is the fourth iteration of the survey, and we’re grateful to the 23 Japanese hedge fund management companies that took the time to complete this year’s survey.

2022 has seen Western economies begin to raise interest rates to combat the threat of inflation, the first time in decades that a significant upwards resumption in the rate has occurred. Surging prices in everything from energy to food has forced central banks’ hands; Japan, however, has remained comparatively insulated, with an inflation rate of ‘only’ 1.99% allowing the BoJ to keep the Japanese base rate at -0.1% throughout this year.

Equity markets in the country have been moving sideways for most of 2022. The Nikkei 225 was down only -1% last year, and the TOPIX down only -2%, but as Patrick Ghali, Managing Partner of Sussex Partners, co-producer of this survey, discusses in his annual review, Japanese hedge funds have been unable to take advantage of the volatility this year.

What will be interesting in 2023 is how Japan’s new Code of Conduct for ESG Evaluation and Data Providers affects Japanese hedge fund managers. The code was finalised on December 15th, 2022, after a three-month consultation period; the document is not a legal requirement, rather a voluntary best practice document, but it will be interesting to see which ESG data providers sign up to it and which don’t. There is widespread frustration amongst hedge fund managers generally about what they perceive as conflicting data amongst providers, and the eyes of not only the Japanese hedge fund industry, but regulators around the world, will be watching the effectiveness of this voluntary document in promoting greater transparency and understanding amongst ratings providers.

Last year, 100% of survey respondents were bullish about the opportunities for them to generate alpha in the coming 12 months. This year, that number falls to 82.61%. A sign of the times, perhaps, that doubts are creeping in with regards to the state of the Japanese equity market. What’s almost certain, however, is that 100% of survey respondents will be hoping that the 82% are right.

I hope you enjoy reading the 2023 edition of the AlphaWeek and Sussex Partners Japan Hedge Fund Industry Survey; click the link below to download the PDF report.

Greg Winterton, Founder, Managing Editor, AlphaWeek

The AlphaWeek and Sussex Partners Japan Hedge Fund Industry Survey, 2023 Edition

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