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Alternative Market Briefing

2012 is 'make or break year’ for Asian hedge fund space, Part One

Tuesday, September 04, 2012

From Komfie Manalo, Opalesque Asia:

As the hedge funds industry shrinks, Singapore-based data provider GFIA said that 2012 is a "make or break year" for Asian hedge funds.

Historical overview of Asian hedge funds industry Between 2003 and 2004, global investors began to take serious notice of Asian hedge funds. Around that time, the region’s hedge fund industry saw major allocations and the space rapidly grew with better known managers getting allocations. GFIA said there were at least136 hedge funds in Asia with more than $200m under management in 2005. By end 2007, there were an estimated 35 hedge funds with over $1bn of hedged assets run from the region.

But the subprime crisis in the U.S. in 2008 saw a surge in redemption requests. Allocations were quickly retracted during the 2008 financial crisis year. Even outperforming funds were not spared from redemption requests. "Larger funds were hit harder than most, and many firms' AUM were more than halved. Funds running more liquid strategies (of which Asia had a larger proportion) were easy targets for "ATM-effect" redemptions, and experienced greater outflows than (generally much larger) illiquid funds. The number of fund closures spiked and several global firms exited the region. Pressures abated in 2009 although the overall environment was still capricious. There was some resumption of inflows but the industry in aggregate did little more than......................

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