Japan in focus | 3 min read | February 2026
Investor Demand for Japan Hedge Fund Strategies Swells
Allocators and gatekeepers discuss hedge fund investing and allocation trends at the Nomura Alternatives Forum 2025
Japan in focus | 3 min read | February 2026
Allocators and gatekeepers discuss hedge fund investing and allocation trends at the Nomura Alternatives Forum 2025
Hedge fund performance in Japan has improved markedly over the past few years, steadily generating returns and contributing to realized earnings, according to panelists at one of two sessions focused on allocators at Nomura Alternatives Forum 2025.
“Interest in private assets has continued to rise recently and, at the same time, we’re seeing renewed interest in hedge funds from our capital introduction vantage point,” said Yasuko Hirabayashi, Head of Capital Introduction at Nomura International, Hong Kong, who moderated the session on allocators in Japan. “Also, it seems performance has been relatively solid lately.”
The allocators and gatekeepers on the panel suggested some reasons that hedge fund investing in Japan has become so favorable. One is rising interest rates, which have allowed hedge funds to find alpha through relative value trades between countries’ diverging monetary and fiscal policies. Another is that, even as equity–bond correlations have risen, well-managed hedge funds can maintain low correlations with traditional assets and deliver steady returns.
Akira Sasaki, Head of Hedge Fund Investments at the Pension Fund Association, noted that hedge funds help to maintain a certain level of liquidity.
“In recent years, given geopolitical risks and a generally uncertain environment, we’ve been operating the portfolio with an emphasis on liquidity, increasing our ability to adjust frequently, and avoiding excessive liquidity risk,” he said.
The panelists turned their attention to the current opportunities in the market. Among those highlighted were systematic strategies, such as macro and quant, to address liquidity challenges, and quantitative investment strategies, including yield-enhancement ETFs and leveraged ETFs.
Another panelist, Taichi Sakagawa, Managing Director of Pan-Alts at Aksia Japan, observed that Japan event-driven strategies continue to look attractive, as M&A activity has picked up over the past year.
“Especially outside large caps, there are areas big multi-platforms don’t fully cover,” he said. “That’s where specialist managers shine.”
Hirabayashi, the moderator, noted that she had seen multi-manager strategies surge in popularity and that they are attracting a lot of capital right now for mid-cap stock picking.
“At the same time, using separately managed accounts in multi-manager-style products is becoming more common, potentially changing the long-term dynamics,” she stated.
Sasaki of the Pension Fund Association related his expectations for hedge funds for the coming years. He said that, as there are still relatively few Japanese portfolio managers in the hedge fund industry, he wanted to support domestic managers starting Japan-based hedge funds with a focus on domestic stocks to “help energize the Japanese hedge fund industry”.
Sakagawa of Aksia Japan added: “Put simply, we want to introduce hedge funds — an extremely attractive and innovative asset class — to a wide range of Japanese investors, as a complement to traditional assets, like equities and bonds, and expand the investor base.”
The other allocator session of the event focused on the allocation trend toward separately managed accounts (SMAs), which are independent fund structures that an allocator owns and controls while delegating trading authority to an investment manager, in contrast to pooled vehicles like mutual funds.
Todd Rapp, CEO of Fortress Investment Group’s Multi-Manager Group — a global alternative investment platform spanning equity long-short, macro, credit, and event-driven strategies — observed that there has been a secular shift in hedge fund allocations toward the adoption of SMAs, driven in part by allocator demand. Large institutional investors, such as pension funds and sovereign wealth funds, are increasingly favoring SMAs when allocating to hedge funds for practical advantages, including capital efficiency, full portfolio transparency, greater control, and the ability to hold assets on their own balance sheets.
Capital efficiency is central to the appeal. SMAs allow for notional funding with minimal posted capital, freeing balance sheet capacity and enabling cross‑margining and cross‑collateralization of investments.
“What a lot of allocators like about SMAs is they allow you to do a lot of different and creative things with that capital,” he said.
According to Rapp, SMAs can provide more liquidity. Traditional fund‑of‑funds structures face notification periods, staggered liquidity, and gates that limit agility, making leverage and dynamic reallocation more difficult. In contrast, SMAs deliver what Rapp calls TLC: transparency, liquidity, and control.
“Transparency means we can see the entire portfolio all the time; liquidity means we can make changes in real time; control means we can reallocate capital much more frequently,” he said. “Without TLC, it’s very difficult to run a portfolio with any degree of leverage.”
Looking ahead, Rapp expects more hedge fund allocators to embrace SMAs. He acknowledged that allocators have different durations of capital, risk tolerances, and rationales for investments, so SMAs are not for everyone. But they offer advantages for those investing in liquid, diversified, uncorrelated strategies.
“Ultimately, the benefits that you get from capital efficiency, diversification, and the measured use of financial leverage can provide significant benefits for investors,” he said, adding they can “lead to a higher Sharpe ratio” for better risk-adjusted returns.
Head of Capital Introduction at Nomura International, Hong Kong
Head of Hedge Fund Investments at the Pension Fund Association
Managing Director of Pan-Alts at Aksia Japan
CEO of Fortress Investment Group’s Multi-Manager Group
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