Japan's hedge-fund industry, dominated by so-called long-short funds that bet on rising and falling stock prices, will attract capital on signs they are starting to outperform their peers, Credit Suisse Group AG said.

The 81-fund Eurekahedge Japan Long-Short Equities Index fell 11 percent this year through October, compared with a 21 percent drop for an index that tracks more than 1,000 global long-short hedge funds and a 40 percent slide by the MSCI World Index, a global benchmark.

"Japanese long-short strategies have weathered reasonably well the market turmoil," Boris Arabadjiev, head of alpha strategies at Zurich-based Credit Suisse's asset management unit, said in an interview Friday in Tokyo. "That relative performance has already started to attract capital, and we believe that it will continue to attract capital. We continue to be favorably disposed to managers investing in Japan."