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Alternative Market Briefing

Hedge fund managers see Asia-focused funds cheaper by 43%

Tuesday, December 10, 2013

Komfie Manolo, Opalesque Asia:

The majority of hedge fund managers in North America, Europe and Asia believes that running a hedge fund in the Asia-Pacific region is cheaper by some 42% compared to operating the same in Europe or the U.S., mainly because of lower-than-average salaries in the region.

A survey of 124 hedge fund managers in North America, Europe and Asia with an aggregate assets of $465bn by Citigroup also found that small funds in the Asia-Pacific region face a major challenge, particularly in raising revenues and expanding its assets.

Bloomberg quoted Citigroup as saying, "A critical success factor in the launch of a hedge fund is the size of assets under management at launch. Small fund launches in Asia have demonstrated a statistically reduced chance of accelerated assets under management growth."

Asian hedge fund managers are also faced with the pressure to cut fees, together with their Western counterparts, to attract investors and raise assets amidst rising costs due to compliance with new regulations. Data showed that the average Asian hedge fund launches this year raised $8m compared to about $25m before the 2008 global financial crisis.

The report added, "It is likely that, initially, any excess cash may need to be reinvested into the business to ensure an institutional-grade infrastructure is in place......................

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