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Bailey McCann, Opalesque New York for New Managers: New hedge funds are launching every day in Asia, according to delegates at the recent Opalesque Hong Kong Roundtable, but staying in business is a tall order.
"In the past, a manager who had a tough first or second year would have hung on hoping to grow out of it. But lately, we have seen managers closing their business within the first year because they have faced performance challenges or they have come to the conclusion that the market will not buy their strategy," explains Theodore Qi Shou, CFA, CAIA, Chief Investment Officer, Director at Skybound Capital. "Despite an increased supply of new managers, the threshold for starting a new hedge fund has increased significantly."
According to Qi Shou not only is it harder to outperform in Asian markets, fund managers must now launch with considerably higher AUM in order to be viable. "In the past, it was not uncommon to see a $5 million startup hedge fund here in Asia, but now, that
threshold is at least $50 million," he says.
Crowded markets
Because Asian markets tend to have fewer listed companies and lower trading volumes it can be hard to outperform other equities managers. In some cases, if traders aren't in the same names as everyone else, they can see performance take a big hit. Whereas if a manager is in Alibaba or Tencent, they...................... To view our full article Click here
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