Sun, Feb 18, 2018
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Mid-sized hedge funds in Asia with $250m in assets appeal to pension and sovereign wealth funds

Wednesday, June 29, 2011
Opalesque Industry Update – Mid-sized hedge funds in Asia with an average of $250m to $700m in assets under management, a minimum of three-year track record, and institutional-quality infrastructures, are the top choice of pensions and sovereign wealth funds for allocations, according to the latest survey published by Citi Prime Finance.

Dagmay Baeuerle, Head of the business advisory group at Prime Finance Asia-Pacific was quoted by AsianInvestor as saying: “Asian hedge funds have reported that as they got close to the $250 million-plus mark, they saw increased due diligence requests from sovereign wealth funds and pension funds with investments coming within nine to 12 months after that,” says Dagmar Baeuerle, head of the business advisory group at Citi. Citi Prime surveyed 58 investors across the globe with an aggregate assets under management totaling $1.65tln and hedge fund managers with an estimated AuM of $186bn.

Interestingly, the study found that as of the first quarter of this year, 57% or $1.1tln of the global hedge fund assets were allocations from institutional investors, after eclipsing high-net-worth individuals and family offices as the biggest allocators to the alternative asset class two years ago. Meanwhile, pension funds account for the biggest slice of institutional allocations to hedge funds at 53.5% of the total investors, while sovereign funds a distant second at 19.8%.

According to the Citi Prime study, the sweet spot or threshold for Asian hedge funds is $250m as investors look at hedge funds with that size as being the nimblest. Baeuerle explained that most investors look at mid-sized hedge funds as adaptable enough to deploy capital “in the most flexible manner and are most willing to negotiate fees and other terms.”

But what makes these small and mid-sized hedge funds more appealing compared to their larger counterparts, is that their managers are more open to forging a closer working relationship with investors, as well as being more accessible and willing to discuss the fund’s performance.

However, more important than the fund size, is the track record. In terms of scale, funds in Asia are smaller compared to their Western counterparts, Baeuerle noted.

Baeuerle added: “We believe that, in the next few years, there will be an increased shift into hedge fund investing by those pension funds and sovereign wealth funds in Asia-Pacific that, to date, do not invest in hedge funds.”

The same study noted a similar trend emerging in the global hedge fund space when it found that mid-sized hedge funds generated the biggest net asset growth last year and demolishing the assumptions that the biggest funds are attracting more money.

In global terms, the sweet spot for managers is between $1bn and $5bn as funds these size experienced the largest percentage in allocation increase during 2010 at 37% of the total money raised by the industry. Hedge funds that manage assets under that range generated an estimated $85bn in net inflows in 2010, compared to an increase of $30bn among managers with an AUM of between $5bn and $10bn, and a net increase of $72bn for funds with more than $10bn under management.
Komfie Manalo

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Chenavari, a $5.4bn hedge fund, told investors it thinks 'we could experience a similar pattern as the 1987 crash'[more]

    From Businessinsider.com: A $5.4 billion hedge fund told clients markets could tumble just like they did in the 1987 crash. In a February 14 letter to clients, London-based Chenavari Investment Managers warned about current market conditions. From the letter (emphasis added): "Our view is that

  2. Active funds shone in selloff, just like they said they would[more]

    From Bloomberg.com: For years, it's been the same refrain. Don't bail on active management, you'll regret it when the market turns sour. And while the selloff that ripped through equities this month has been too short to prove anything, early returns suggest they had a point. Thanks to differentiate

  3. No place to hide: managed futures funds fall with stocks[more]

    From Barrons.com: Managed futures mutual funds haven't lived up to their billing of providing uncorrelated returns so far in 2018, continuing a disappointing multiyear stretch. The $10 billion AQR Managed Futures Strategy, the largest fund by a wide margin in the category, was down 2.75% year-to-dat

  4. Investing - Hedge fund Bridgewater makes $22 billion bet against European firms, Hedge funds Steadfast and Suvretta jump onto CSX in fourth quarter, Tepper's Appaloosa boosts Apple, Facebook as others bolt, Third Point buys Netflix and MGM, dumps Bank of America, Moore Capital bought Wynn Resorts, other casino stocks before Steve Wynn resigned[more]

    Hedge fund Bridgewater makes $22 billion bet against European firms From Reuters/USNews.com: Bridgewater has shown its hand in Europe with a $22 billion bet against some of the continent's biggest companies, filings reviewed by Reuters show, part of a bigger shift by the world's largest

  5. Funds Profiles - Brother-run hedge fund up 46% in 2017 says Kelly formula shows diversification is flawed, How a 6,000% profit on a single trade saved a small hedge fund from disaster[more]

    Brother-run hedge fund up 46% in 2017 says Kelly formula shows diversification is flawed From Valuewalk.com: When Jeremy and Michael Kahan consider the notion of diversification, the wince. With a return of 45.8% to end 2017, their stock-picking fund, North Peak Capital, successfully