Pioneer Investments and Bank of Bermuda have unveiled the results of their "Survey on Attitudes to Hedge Funds in Hong Kong and Singapore."
Carried out between February and April 2004, the inaugural survey reveals details of market perceptions of hedge funds. Included in the survey were retail banks and IFAs, institutional investors, investment consultants and private banks.
Edmund Lacis, Senior Vice President and Asia Region Head, International Sales and Distribution, of Pioneer Investments, said: "The survey reveals that there is still a lot to be done to convince retail and other investors of the value of hedge funds in a diversified portfolio. Reducing portfolio volatility and delivering absolute returns are two of the key benefits hedge funds can provide. Having more authorised products will speed this education process, as long as those products are of high quality and conform to the local regulations."
Paul Smith, Executive Vice President and Head of Global Fund Services at Bank of Bermuda (part of the HSBC group) said: "The retail hedge fund market is still at an early stage. We will continue to work with hedge funds, both existing and start-ups, and we are confident of the retail market's growth in the future. This survey bears out that confidence."
* Retail investment advisors and institutional investors alike believe market development can best be achieved through the approval of more authorised hedge funds.
* The retail hedge fund market remains underdeveloped with many misconceptions persisting.
* Market participants are almost universally positive on the prospects for retail investment into hedge funds, with predictions for growth of between 10% and 20%, this year and next.
* IFAs and retail banks expect guaranteed hedge funds to dominate retail appetite, with up to 20% growth expected over the next two years.
* Reflecting increased retail sophistication, retail advisors believe that having a hedge fund specialist as a fund administrator increases retail appetite.
* While institutions remain wary of hedge funds, attitudes are slowly changing with high growth expected, both by institutions themselves and investment consultants. Institutions expect institutional investment into hedge funds to grow 20% to 25% this year and next.
* Private bankers highlight client reluctance to diversify portfolios across the growing range of hedge fund strategies, with bankers positive on a wide range of strategies while their clients stick to a narrow range of strategies.
A total of 47 firms participated in this survey. Interviews were carried out in Hong Kong and Singapore both in person and over the phone.