Asian Hedge Funds Recovery
Asian Hedge Funds Short of Recovery Amid Recession Fears
While Asian hedge funds have performed better recently than in prior years, the Asian hedge fund industry is still far short of pre-crisis AUM levels. Now, with the economic slump and fears of another recession, investors are not expected to invest enough to push Asian hedge funds to pre-crisis levels.
Asia's hedge funds industry is seen struggling to regain its pre-crisis size any time soon as the recent global market slump threatens to deter investors from making fresh allocations to them and delay new product launches.
That is bad news for the dozens of start-ups, prime brokers and service providers who have set up shop or expanded in Asia in the hope of capital returning to the region.
Regional hedge fund assets contracted 5 percent in the first half of 2011 to $145 billion (93 billion pounds), $47 billion below the peak level hit in December 2007, as defensive portfolios clipped returns and investors started applying the brakes to capital re-allocations, new data released by industry tracker AsiaHedge on Monday showed.
By contrast, the global industry regained its pre-crisis asset levels last year and subsequently scaled new highs of above $2 trillion, according to data from Hedge Fund Research.
Even though total assets of Asia-focused hedge funds are probably higher -- with many large funds not disclosing their assets to data providers -- industry insiders say assets remain well below peak levels.
"Given the mess the world appears to be in, I just don't see risk appetite returning this year," said Peter Douglas, founder of Singapore-based hedge fund consultancy GFIA Pte. Source
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