Asian Hedge Funds Hit Hard In May

Asian hedge funds may have lost up to two-thirds of their year-to-date gains in May alone, with strategies such as macro and CTA, which bet on long-running market trends, hit hardest, said Matt Pecot, head of Credit Suisse's prime broking unit in Asia-Pacific.

"It's quite painful, especially through mid-May and then it got a little bit better, but still you are probably looking at people giving up two-thirds to a half of their year-to-date performance," said Pecot in an interview.

"Part of that was driven by a desire to try and protect returns. Part of it was driven by concerns around Europe and the Greek crisis. Part of it was driven by uncertainties around QE2 ending."Pecot, who joined Credit Suisse in 2009 from UBS, said such factors led to a lack of clear direction in market for many Asian managers.

The June-to-August period was also looking slow as they still try to come to grips with the QE2 ending, he said."Very similar to last year, I think funds are going to need to re-risk during the second half of the year in order to try to improve their performance," he added.

Hedge funds in Asia lost in the first two months of 2011 but gains in the next two months helped them return about 2 percent up to April as measured by Eurekahedge Asia Index.The funds' exact losses or gains will be known towards the middle of the month.