GFIA: Mid-sized Is The Right Size For Asian Hedge Funds

Jun 21 2010 | 2:58am ET

Goldilocks got it right. At least she would have if she were talking about Asian hedge funds. Some are too big, some are too small, and some are just right.

According to Singapore-based hedge fund research and fund advisory firm GFIA, medium sized Asia (ex-Japan) long-short equity funds—those that manage US$250 million to US$750 million—perform the best.

A new white paper from GFIA shows that in 2008, $450 million to $750 million was the sweet spot for long-short equity managers. In 2006, those figures were  $150 million to $300 million. And in 2004—a period when market capacity was more limited—the best performers has assets under management of $50 million to $100 million.

The white paper also quantifies the degree of shrinkage of the Asian hedge fund industry over the past three years, finding that on average, 60% of Asian hedge funds are still managing at least 20% less capital than in 2007.

“Although the trend is for the performance sweet spot of Asian equity hedge funds to increase over the years, allocators still need to be very aware of the appropriate size of fund to maximize likely performance in Asia," says Peter Douglas, principal of GFIA and Asia-Pacific representative director of the Alternative Investment Management Association.

"Alpha is never scalable, and our research confirms this," adds Douglas. "The average size of Asian hedge funds has still not recovered from 2008 redemptions, and there’s therefore a current opportunity for allocators to participate in right-sized funds.”

GFIA only sells its research to investors and allocators. It does not participate in the economics of underlying managers.


In Depth

Fundraising for Mid-Sized PE Funds: Should You Use a Registered B/D?

Dec 6 2016 | 7:18pm ET

When does a fund sponsor need to use a registered broker/dealer when raising capital...

Lifestyle

Trump Attends 'Villains and Heroes' Costume Party Dressed As...Himself

Dec 5 2016 | 11:16pm ET

U.S. President-elect Donald Trump attended a "Villains and Heroes" costume party...

Guest Contributor

Nowhere to Hide: Why the Future of Asset Management Depends on Innovation

Nov 15 2016 | 6:55pm ET

Information technology has reshaped the asset management industry’s periphery,...

 

From the current issue of

Since the inception of Modern Trader, a core editorial theme has centered on the wisdom and power of crowds. Editorial emphasis has focused on companies and projects engaged in the collection and analysis of information. 

AVAILABLE NOW at BARNES & NOBLE

NEWSTAND LOCATOR