SynopsisAsia-focused hedge funds delivered outsized returns in 2026 by riding the artificial intelligence boom across semiconductors and related technologies. Strong demand for AI infrastructure, coupled with supply constraints, lifted regional markets and helped fund managers uncover opportunities across Asia’s expanding technology ecosystem.ETMarkets.comAI-driven bets fuel exceptional returns for Asia hedge funds.Asia-focused hedge funds have emerged as some of the biggest beneficiaries of the artificial intelligence boom, with several delivering triple-digit returns in the first five months of 2026 by capitalising on investments across the semiconductor and AI ecosystem.The strong gains underscore that the AI-driven market rally has remained resilient despite bouts of volatility triggered by geopolitical tensions, including the conflict in Iran. Rising demand for AI infrastructure and supply-side constraints across the semiconductor industry have helped propel technology stocks higher, driving benchmark indices in Japan, South Korea and Taiwan to record levels.Hong Kong-based WT Asset Management's long-short China Focus fund generated a net return of 103% between January and May, aided by a gain of more than 20% in May alone. The firm's long-only fund advanced 67.5% during the same period.WT's performance was driven by investments in AI hardware companies and Chinese technology firms, including semiconductor manufacturer Hua Hong Semiconductor and AI agent developer Knowledge Atlas, also known as Zhipu AI.Public filings show WT was a cornerstone investor in Zhipu AI, whose shares have surged more than tenfold since its Hong Kong market debut in January. Sources familiar with the matter told Reuters that the firm's assets under management have expanded rapidly and now stand at around $10 billion.Other technology-focused investment firms have also posted exceptional returns amid the AI surge.Hong Kong-based E20 Capital, which was launched in 2025, delivered a net gain of 136% in the first five months of the year. The performance was supported by investments in memory-chip makers, optical technology companies and CPU-related businesses through its flagship Global Opportunity Investment Fund, which manages approximately $2 billion in assets.Meanwhile, Reuters reported that Trivest Advisors, a long-standing technology-focused investment firm, generated an 88.9% return during the January-May period.WT Asset Management declined to comment on its performance, while E20 Capital and Trivest Advisors did not respond to requests for comment.Market participants said that Asian investors were particularly well positioned to identify opportunities in the AI supply chain because the region encompasses nearly the entire semiconductor manufacturing ecosystem. This proximity allowed fund managers to recognise supply bottlenecks early and build positions across multiple AI-related segments before global investors fully appreciated the trend.The broader market backdrop has also been supportive. China's benchmark Shanghai Composite Index has climbed to its highest level in more than a decade. South Korea's KOSPI has nearly doubled this year, while Japan's Nikkei 225 and Taiwan's benchmark weighted index have gained approximately 31% and 53%, respectively.Experts told Reuters that Asia continues to offer significant opportunities for investors seeking outsized returns. He noted that many AI supply-chain companies in the region remain under-researched and receive limited attention from international investors.They also highlighted emerging investment themes beyond artificial intelligence, including corporate governance reforms and block-trade opportunities, which are attracting increasing interest among institutional investors across Asian markets.(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. 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