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Peter Douglas Peter Douglas, founder of GFIA in Singapore, has been researching and investing in Asian hedge funds since 1998. In an interview for Opalesque’s Legends and Leaders series, Douglas commented that Asian hedge funds are surprisingly resilient. "We have seen surprisingly few real failures. Clearly there is attrition; roughly 10% of the universe a year will turn over but it is just in line with the global hedge fund norms. So, despite the volatility of the Asian capital markets and the macroeconomic picture in Asia, the Asian hedge fund industry has done a pretty good job of staying safe."
Douglas looks for red flag indicators of where managers might be experiencing problems. "Top of the list would be size" he says. "Asia is not friendly to large pots of capital. So, if we see an alpha seeking strategy that is $1 billion or more than $1 billion, yet, we know that manager is sailing into headwind. We know that manager is making their own life difficult. It does not mean so they can not do it and there are some very clever people out there, there are some great managers that do manage large amounts of capital, but it is much harder."
For Douglas, the sweet spot depends on the strategy. "If you want a point estimate probably about 500 million, but that is 500 million plus or minus 200 million, and it does depend on the strategy. It also depends on where in the market cycle we are. At the top of the Asian market cycle apparent capacities can be much higher. At the bottom of t...................... To view our full article Click here
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