With investors betting that the policies put in place by Prime Minister Shinzo Abe will revive the world's third-largest economy, Japanese hedge funds had given record returns in 2013, Bloomberg Businessweek reported. A return of over 300% was posted by the warrant of Stratton Street Capital while returns of Hayate Japan Equity Long-Short Fund nearly doubled. In the 11 months of the year ending November, the Eurekahedge Japan Hedge Fund Index, which monitors around 80 funds, posted a 24% return, making 2013 the best year yet since it started gathering data in 2000.

The report said Japanese hedge funds had made a turnaround from being the worst performers in the world last year to being the best this year as the reflation efforts of the country's central bank to position the benchmark Topix index on the path towards the largest increase in 14 years. The move also weakened the Japanese currency by 17% against the dollar. In the second half of the year, the assets of funds focused on Japan that Eurekahedge tracked had risen to $451 million, the highest in about two years, the report said.

Symphony Financial Partners Co-Chief Executive Officer David Baran told Bloomberg Businessweek, "Japan has come full circle for a lot of investors. Many investors felt that all Japanese companies were bad investments, which was patently inaccurate. Those investors who have dismissed Japan have been motivated to come back to the market by Abenomics." In a letter to investors, Baran's $300 million SFP Value Realization Fund was able to return 73% in the year ending November, net of fees, the report said.

Prime Minister Abe assumed office in December last year and promised a three-way strategy comprised of aggressive monetary easing, fiscal stimulus and deregulation welcomed by investors. He appointed Haruhiko Kuroda, the Governor of the Bank of Japan, to do the job. In April, Kuroda started monetary easing in April, pledging to double the country's monetary base by bolstering the purchase of bonds and other financial assets so that a 2% inflation could be realized in two years.