Hedge Fund Partnerships

Hedge Fund Partnerships

Hedge Funds in Asia Seek Partners to Mitigate Risk, Costs

Small hedge funds in Asia are sacrificing autonomy for partners that will help them overcome the initial startup and infrastructure costs. By partnering with a larger hedge fund management firm, many small hedge funds are meeting investor demands for strict risk standards and having a partner that will help share costs.
“I’ve seen a lot of people invest in infrastructure and just struggle to ever recoup that, limping along for ages,” Dickson, 41, said in an interview in Singapore. “I won’t have to spend days with regulators, risk officers and compliance people; I just focus on running my fund.”

Asia’s smaller hedge funds are sacrificing autonomy for organization to help share costs and meet stricter risk standards demanded by investors in the aftermath of Lehman Brothers Holdings Inc.’s bankruptcy and Bernard Madoff’s ponzi scheme. At least 10 firms in Asia are now offering services such as trade execution and office support, taking a cut of the manager’s revenue or equity in the fund.

Firms that provide hedge funds with operational functions are not new to the U.S. and Europe, where companies such as FrontPoint Partners LLC of Greenwich, Connecticut, and Stockholm-based Brummer & Partners have built multi-manager businesses that offer support to smaller funds. Asian funds, which typically had tried to remain independent, are now more tempted to pool efforts after superior returns failed to attract assets, said Peter Douglas, principal of Singapore-based GFIA Pte.  Source

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