New data released by AsiaHedge shows that Asian hedge fund assets contracted by 5 per cent in the first half of 2011 to USD145billion reported Reuters thi
New data released by AsiaHedge shows that Asian hedge fund assets contracted by 5 per cent in the first half of 2011 to USD145billion reported Reuters this week. That’s still USD47billion below the high-water mark of December 2007 and suggests that investors are showing hesitation re-allocating to hedge funds as global economic fears drive sentiment towards defensive positions, cash and bonds seemingly the preferred asset class right now. The region is constantly lauded for its strong economic growth and prudent regulatory approach but as mentioned above, the performance of Asia ex-Japan hedgies is far from good: they’re down -4.75 per cent so far and investors will inevitably be pickier than ever when looking at managers given the fees involved. They want bang for their buck.
Of course, this isn’t just a problem affecting Asian fund managers, it’s a global issue. Peter Douglas (pictured), principal of Singapore-based GFIA Pte, a hedge fund consultancy firm, told Reuters that given the mess the world appeared to be in “I just don’t see risk appetite returning this year.” The AsiaHedge data also showed that new launches in the second half of the year have secured noticeably less capital than the first half in four of the last five calendar years: although you can’t assume that history will repeat itself, the signs are hardly encouraging. And with the regulatory belt tightening, additional operational costs are making the barriers to entry higher than ever. These are tough times to be contemplating a new fund. Some managers are cancelling marketing trips to the US and Europe according to Martin Visairas, Citigroup’s Asia Pacific head of sales and capital introduction. “For some funds performance has been challenging and investors have widely adopted a wait-and-see approach,” said Visairas.
