Outlook Good For HK Hedge Funds In 2002

by Philip Morton, Investors Offshore.com

08 January 2002

The Chairman of the Hong Kong Investment Fund Association, Joseph Silva, predicted earlier this week that with equity funds floundering the region's investors would fall evenly on either end of the risk spectrum in 2002, choosing either to invest in guaranteed funds, or in hedge funds should the SFC allow them to be marketed to the general public.

According to Mr Silva, around 44% of the industry's gross inflows went into guaranteed funds in the first 10 months of 2001, and little optimism that a global economic recovery is around the corner, investors in Hong Kong might choose to stick with these slightly safer vehicles:

'The global stock markets were in turmoil last year, so it was natural for investors to seek guaranteed funds, which could offer a promising level of returns,' he explained.

However, at the other end of the scale, according to the IFA chief, hedge funds could also prove popular with the investing public in Hong Kong, as they are able to use sophisticated investment instruments in order to hedge against falling markets. 'When global markets are down, people tend to like to invest in hedge funds as they can outperform the markets,' observed Mr Silva.

When and how hedge funds will become available to individual investors is as yet unknown, but the Securities and Futures Commission is giving the possibility serious consideration, and has launched a consultation document on lifting the existing ban.

Recommended