Hedge Fund Industry Survey by AlphaWeek and Sussex Partners Japan, 2025 Version
Japanese hedge funds are experiencing a resurgence in interest, with renewed investor attention and rapid asset growth, according to the latest AlphaWeek and Sussex Partners Japan Hedge Fund Industry Survey. The survey, which is the sixth in the series, found that a strong majority of Japanese hedge fund managers believe that both the Japanese Stewardship Code and the Japan Corporate Governance Code have been beneficial to their strategies.
The performance of Japanese hedge funds has been noteworthy, with notable fund launches and asset growth. For instance, OQ Funds Management’s Japan quantitative hedge fund rapidly reached fundraising limits, and Sengu Capital’s Japan-focused fund tripled its assets within months. MY.Alpha Management’s Japan multi-strategy fund also saw significant growth, now managing about $700 million.
In comparison, Japanese equities, as measured by the TOPIX Total Return Index, have posted strong gains. For Q2 2025, TOPIX Total Return rose 7.5%, and the Nikkei 225 was up 13.6%. In dollar terms, the TOPIX index delivered an annualized 8.4% return over recent years.
Despite these strong returns, hedge funds would need to outperform these benchmarks to attract significant investor attention, as evidenced by rapid asset inflows and fund capacity constraints.
ESG considerations are also gaining importance in the Japanese hedge fund industry. A major driver of investor interest in Japan is the deepening of corporate governance reforms and increased shareholder engagement. These reforms have improved transparency and accountability, factors that are often closely aligned with ESG principles.
While there is no explicit survey data on the extent to which Japanese hedge fund managers consider ESG factors, the broader narrative points to improved corporate governance and capital return policies—such as increased share buybacks—as key developments. These trends are generally supportive of ESG-focused investing.
The Japan hedge fund sector is experiencing a resurgence, with new funds quickly reaching capacity and existing funds tripling their assets. This is attributed to improved corporate management, the exit from deflation, and global reallocation moves seeking diversification. The yen is expected to benefit from USD diversification moves, and Japan’s macro backdrop—stable or rising real wages, increased consumer spending—is supporting investor confidence.
There is a strong appetite from large institutions for Japan-dedicated hedge funds, especially those with proven track records, highlighting a strong demand-supply imbalance in the market.
The 2025 edition of the AlphaWeek and Sussex Partners Japan Hedge Fund Industry Survey is available for download. However, it is important to note that the report does not contain any new standalone facts about the Japanese hedge fund industry, TOPIX, Bank of Japan interest rates, or the percentage of managers considering ESG factors or their opinions on the Japanese Stewardship Code and the Japan Corporate Governance Code. Reproduction, storage, or transmission of the survey requires written permission from the publisher.
In conclusion, while direct survey data from AlphaWeek and Sussex Partners is not available in the provided sources, the overall trends show robust performance in Japanese equities, a revival in Japan-focused hedge fund activity, increased investor attention driven by governance reforms and macroeconomic stability, and a growing focus on ESG considerations through improved corporate practices.
In the context of the Japanese hedge fund industry, rapid asset growth and new fund launches suggest an increased interest in finance and investing, particularly in business sectors that show promise, such as those with improved corporate governance and capital return policies. The resurgence of Japan-dedicated hedge funds also demonstrates the importance of ESG considerations, as institutional investors seek funds with proven track records that align with ESG principles.
