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Alternative Market Briefing

Hedge fund industry landscape 'fundamentally changed' after the global financial crisis, GFIA

Tuesday, February 08, 2011

amb
Peter Douglas
From Precy Dumlao, Opalesque Asia:

Singapore-based consulting firm GFIA Pte Ltd has released its latest study titled: "Asian Hedge Fund Industry pre- and post-Global Financial Crisis" which "confirmed" that the Asian hedge fund industry fundamentally changed after the global financial crisis in 2007 and early part of 2008.

Peter Douglas CAIA, principal of GFIA, commented: "While hedge funds still offer a much more appealing investment profile than long-only funds, clearly it's now harder to find genuinely different hedge fund strategies in Asia, and levels of risk appear to have ratcheted up. We suspect that investor appetite for extremely liquid opportunities probably explains much of the higher correlations, and slower allocations explain the drop-off in fund launches."

Amongst the key findings of the study include:

  • Fund closures peaked at the height of the GFC in 2008 and fund launches have been downward trending since 2005.
  • Exposures peaked in mid 2007 and bottomed in early 2009 with a fairly high correlation to the cumulative returns of the market index.
  • Funds became riskier post-GFC with greater dispersion across strategies
  • Majority of strategies saw an increase in correlation with other strategies.

The study found that the global financial crisis destroyed the values of financial assets in many parts of the world. Asia......................

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