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Alternative Market Briefing

Asian hedge fund managers offering more diverse opportunities, Part One

Monday, August 15, 2011

From Precy Dumlao, Opalesque Asia:

The Asian hedge fund industry has come a long way since data was first tracked by Singapore based hedge fund research firm GFIA Pte. Ltd., in 1998. But Asian hedge fund managers only started getting attention from allocators between 2003 and 2004 when allocators actually began doing research on the region. Since then, the Asian hedge funds universe has evolved and its managers are now offering a more diverse opportunity set, according to GFIA.

In its latest Asia Hedge Funds Note, GFIA reported that the Asian markets have matured and developed in complexity in the past several years. Thus, available instruments for hedging have also grown in both variety and liquidity. This development brought an increasing number of managers with low or minimal correlation to equity markets.

The report stated: "Long-short equity, multi-strategy and event driven funds have somewhat higher than normal correlations, but it is still possible to construct a portfolio of diversified Asian exposure with low market correlations. We did observe significant spikes in correlations during the financial crisis in 2008, but correlations have been gradually coming down since. Nonetheless, the dictum that 'in a bear market the only thing that goes up is correlation’ is especially true of this region, and is a corollary of the provisional liquidity discussed earlier."

Asian hedge funds saw increased all......................

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