Reply #16: US capital swells Asia hedge fund coffers [View All]

http://news.ft.com/cms/s/d08f1014-51ea-11d9-961a-00000e2511c8.html

Investments in Asian hedge funds have nearly doubled this year, reflecting a growing influx of US capital after years of reduced exposure to the region.


Total assets have jumped to about $60bn in mid-December from $34bn at the end of 2003, according to Eurekahedge, the Singapore-based consultancy. AsiaHedge, its London-based rival, believes assets will have climbed to more than $70bn by the end of this year.

“Last year Asia was fashionable because of its capital market growth,” said Peter Douglas, head of GFIA Pte, a Singapore-based consultancy. “This year, many hedge fund investors have caught on to the idea that the region is structurally inescapable.”

While global hedge fund returns have fallen sharply this year, Asian hedge funds have continued to outperform their more mature rivals in the US and Europe. Some industry experts point to the fact that Asian financial markets tend to be less heavily researched than their more developed counterparts, creating market inefficiencies that hedge funds seek to exploit.

This has not been lost on the big US hedge fund groups, many of which cut their exposure to the region following the 1997-98 Asian financial crisis. At the time some Asian politicians accused hedge funds of making speculative trades on the rise and fall of the region's currencies, contributing to their collapse.

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