Some hedge funds operating in Asia have produced extraordinary gains through May, with a handful reporting year-to-date returns that exceeded 100% by the end of the fifth month. Sources close to fund performance say the rally was powered by a concentrated set of bets on AI hardware and companies tied to large language models, and by early positioning across multiple AI subsectors.
Market participants describe the edge for these regional managers as their ability to identify supply-side constraints within an ecosystem where Asia accounts for almost the entire semiconductor stack. That positioning, the sources said, allowed funds to capture opportunities from memory and CPUs to optics and other components that feed AI development.
Investors point out that wider market volatility linked to the Iran war did not put a stop to this AI-led advance. Instead, elevated demand combined with tight supply supported share prices and helped push major Asian markets to fresh highs - including record levels in Japan, South Korea and Taiwan.
Fund-level performance details
Hong Kong-based WT Asset Management reported particularly strong returns at the fund level through the end of May. Its long-short China Focus fund delivered a net return of 103% year-to-date, according to one source, after rising by more than 20% in May alone. The firm's long-only vehicle returned 67.5% over the same period.
The source attributed WT's results to concentrated wagers on AI hardware and China-focused technology companies, citing chipmaker Hua Hong Semiconductor and AI agent Knowledge Atlas among notable contributors. Public filings indicate WT was a cornerstone investor in Knowledge Atlas, also known as Zhipu AI, which saw its shares surge by more than 1,000% year-to-date following a Hong Kong listing in January.
Assets under management at WT have reportedly expanded substantially, with one source estimating the firm now manages around $10 billion. WT Asset Management declined to comment when contacted.
Other funds focused on technology also recorded outsized gains. E20 Capital, a Hong Kong hedge fund that launched in 2025, posted a net gain of 136% in the first five months, according to a source. Its exposure to memory, optics and CPUs boosted returns at its $2 billion flagship Global Opportunity Investment Fund. Trivest Advisors, a long-time technology investor, achieved an 88.9% gain in the same period, another source said.
E20 Capital and Trivest Advisors did not respond to requests for comment.
Market backdrop and broader indicators
Equity benchmarks across the region have reflected the rally. China's Shanghai Composite has climbed to its highest level in more than a decade. South Korea's KOSPI has surged almost 100% so far this year, while Japan's Nikkei 225 and Taiwan's weighted index have risen about 31% and 53%, respectively.
Navin Raj Jaidev, a senior investment director at Cambridge Associates, said the Asian market structure is creating a fertile environment for outsized returns because many firms in the AI supply chain "remain under-covered and under-recognised by global investors." He also noted that other themes, including corporate governance reforms and block trades, are gaining traction among investors.
What fund managers and markets are watching
Sources emphasised that early recognition of supply constraints across semiconductor components was key to the strong fund returns. By identifying bottlenecks and premium demand for AI-related hardware, regional managers were able to position across the value chain and reap the benefits as prices and equities rallied.
At the same time, the developments highlight how a concentrated technology and hardware-led move can lift equity markets even amid unrelated geopolitical volatility.