In its most recent client monthly newsletter, GFIA pte ltd, the Singapore based specialist in skill-based managers in Asian and emerging markets, reviewed the performance of long only and long-short Asian equity funds. GFIA’s study found that long only funds tend to outperform long-short funds, although the latter offer better risk-adjusted returns. Regional Asian long only funds appear to be more active in adjusting their exposures than long-short funds. Long-short funds are however generally less volatile and preserve capital better during bad times. However, during good years, long-short funds underperform relatively to their long only counterparts.

Summary findings include:

· Correlations of long only and long-short funds with their benchmark indices are high, with the long-only tending to be slighter more correlated to the index than the latter

· Long only Asia inc-Japan managers demonstrate more fluctuation in correlations with their benchmark, than their long-short counterparts, suggesting more active management of portfolio exposures

Peter Douglas CAIA, principal of GFIA, commented: “In aggregate, long-short funds charge 13% higher management fees, and 60% higher performance fees, than the long-only funds in our universe. The higher fee buys you more consistent performance, and risk mitigation – not more performance.”