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Hedge funds still love Japan despite losses

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The evolving hedge fund Japan trade

Hedge fund managers are still bullish on Japan despite a painful start to the year.

After large gains in 2013, the Nikkei 225 stock index is down nearly 11 percent this year. The Japanese yen, which many investors were betting against, has also appreciated almost 3 percent versus the U.S. dollar.

Those broad moves have cost investors: The average Japanese stock-focused hedge fund fell an estimated 5.75 percent over the first quarter, according to data from Simplify, which tracks performance.

Hedge funds appear to be unfazed by the bad news.