September 22, 2010 / 5:13 AM / 9 years ago

Asia-focused hedge funds hit record high in July-Eurekahedge

* 125 hedge fund start-ups between Jan and July - Eurekahedge

* 25 pct of funds headquartered in UK, 19 pct in HK

* 40 pct of Asia-focused funds have below $20 mln in AUM

SINGAPORE, Sept 22 (Reuters) - The number of hedge funds investing in Asia hit a record high of 1,278 in July, Singapore-based fund tracker Eurekahedge said on Wednesday, as new funds look to raise their exposure to Asia’s fast-growing economies.

This compares with around 1,200 funds in existence at the end of 2009 and exceeds the previous peak of 1,240 in 2007.

Hedge funds have been making a beeline for Asia, attracted by strong economic growth and lighter regulation in Singapore and Hong Kong at a time when Western countries are looking to tighten control of hedge funds following the financial crisis. [ID:nSGE6440GZ]

“The 125 Asian hedge fund launches in the first seven months of the year represent a return to the healthy growth seen before 2008,” Eurekahedge said in a report.

It said the rise was a result of growing interest in Asia as well as the ease in setting up hedge funds in the region compared to several years ago.

Other factors cited by the fund tracker included increasing availability of complex financial products in Asian markets, lower set-up costs compared with the West and efforts by local governments to attract global fund managers.

Most Asia-focused hedge funds continued to focus on stocks, although the proportion adopting long/short equities strategies fell to 44 percent compared with 48 percent at the end of July 2008 and 60 percent in July 2004.

Eurekahedge estimated that one quarter of hedge funds investing in Asia are headquartered in Britain. Another 19 percent are based in Hong Kong, 13 percent in Singapore and 11 percent in the United States.

Australia and Japan accounted for 9 percent and 6 percent, respectively.

Hedge funds investing in Asia remained puny relative to their European and North American counterparts, with 40 percent of the funds reporting assets under management of $20 million or less.

Another 26 percent of Asia-focused funds had $21-50 million in assets and just 1 percent had assets in excess of $1 billion.

Asia-focused funds have performed better than global funds in August, but their overall performance so far this year has lagged.

The Eurekahedge index on Asia-focused hedge funds excluding Japan was up 0.66 percent in August, but was flat for the year.

That compares with a 0.46 percent rise in the Singapore-hedge fund tracker’s global index in August. Still, the global index is up 1.71 percent year-to-date. (Reporting by Kevin Lim; Editing by Dhara Ranasinghe)

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