Hedge Funds Continue To Flock To Asia

by Carla Johnson, Investors Offshore.com

17 October 2005

The number of new hedge funds in Asia increased four-fold this year as US-based firms such as Citadel Management Inc. and Tremont Capital Management Inc. took a larger share of the region's $85 billion market, the fastest growing in the world.

Data compiled by the Singapore-based research firm Eurekahedge has shown that 60 new hedge funds were started in the region in the first nine months of 2005 - most of these in Hong Kong - compared to just 15 new funds throughout the whole of 2004.

“Asian markets are the fastest growing in the world," observed Donald Sussman, founder of Paloma Partners Management Co, a $3.5 billion fund based in Connecticut which has a team of traders in Hong Kong, in a report by Bloomberg.

"The economies are the most robust and the need for capital is great,” he added.

Research published in the July edition of AsiaHedge revealed that a record $3.5 billion was raised by start-up hedge funds in Asia during the first half of the year. In the corresponding period of 2004, new hedge funds raised some $1.7 billion in assets.

According to AsiaHedge, the bulk of assets raised by new hedge funds in Asia traditionally occur in the second half of the year, meaning that 2005 as a whole is likely to be another record year for growth in the region's hedge fund industry.

AsiaHedge reported that one of the most popular areas for start-ups this year in terms of strategies has been Asia (excluding Japan), where 13 new funds raised $828 million in the first half of the year. Hedge funds focusing on a single country, particularly China and India, were also popular, with 16 funds raising $1.77 billion in this category in the first half.

Recommended