Hong Kong Analyst Queries Level Of Hedge Fund Demand

by Mary Swire, Tax-News.com, Hong Kong

24 April 2002

There has been plenty of excitement recently in Hong Kong's investment community over the probable relaxation of hedge fund regulation by the Securities and Futures Commission (SFC), but a local fund manager has just said that demand may not be as is generally supposed.

Stewart Aldcroft, managing director of Investec Asset Management Asia, says that retail investors in Hong Kong expect immediate returns, transparency in fund management and a demonstrated performance record, none of which are necessarily characteristic of hedge funds.

"Retail investors in Hong Kong are still relatively immature. Only a very small proportion of the population has even bought traditional funds," Mr Aldcroft says, "Their experience of volatility and their commitment to making a long-term commitment is pretty low."

He says that it will take at least a year after the first retail hedge fund is launched in Hong Kong for the products to gain popularity among the territory's investors.

Currently there are about 1,900 mutual funds available in Hong Kong, and it's thought that a mere 5% of the 6.8m population invest in them.

Mr Aldcroft says that the SFC should initially limit approval to funds of hedge funds, and thinks that an appropriate minimum investment level would be US$5,000.

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