Investors will be looking for higher comparative returns in 2005 following a year of tough investment conditions for Asia-Pacific hedge fund managers.

The Bank of Bermuda AsiaHedge Composite put on 6.5% in 2004. Australia and Japan were the high flyers in 2004. Australia put on nearly 20% after a strong December while Japan long/short yen gained 11%.

Both of the regional strategies did poorly in 2004, virtually matching each other for performance at about 6.6%. A comparatively strong December performance boosted Asia including Japan returns.

Asia excluding Japan strategies has seen particularly strong interest from investors in the past few years. Managers in this area will have their work cut out in 2005 to repay investors' faith in them.

Strategy<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

Dec 04

 YTD

Asia inc-Japan <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />US$

1.45%

6.63%

Asia ex-Japan US$

0.43%

6.69%

Japan long/short US$

0.82%

7.58%

Japan long/short yen

0.52%

10.90%

Australia long/short AUS$

1.63%

19.58%

AsiaHedge Composite

0.86%

6.48%

Emerging Markets

1.97%

12.78%

The Bank of Bermuda AsiaHedge indices show median returns each month and measure the performance of hedge funds in four geographies, including Japan, Asia excluding Japan, Asia including Japan, and Australia.