2004 A Slow Year For Asian Hedge Funds Start Ups

by Carla Johnson, Investors Offshore.com

23 June 2004

A report by alternative investment industry publication AsiaHedge has described a marked decline in the number of start-up hedge funds in the Asia region in the first half of 2004.

According to the report, around 40 funds were started in the first six months of the year compared to 90 start ups that were established in the latter half of 2003. As a result, assets raised by new funds fell from $3.1 billion in the latter half of 2003 to $1.6 billion in the first half of 2004.

The largest proportion of assets raised was accounted for by London-based funds at $442 million, followed by Hong Kong with $356 million. However, in the last 18 months, Hong Kong-based start ups are at the top of the list, raising some $1.3 billion in assets, which analysts have attributed to the city’s well established network of prime brokers, administrators and distributors.

It has been suggested that the major factors contributing to this slowdown include recent volatility in the equity markets and a growing shortage of new investment talent particularly in Japan, leading to many planned start ups to postpone their launch.

"It's been a pretty rough first half for the global hedge fund industry in terms of investment returns. We've seen some of the worst data since the demise of Long Term Capital Management,” observed Iain Jenkins, managing editor of HedgeFund Intelligence, which owns AsiaHedge.

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