In what could prove a big year for billion-dollar hedge fund startups, Asian funds may play an historically big role, a Deutsche Bank prime brokerage executive predicts.
Fifteen new funds could garner at least US$1 billion within two months of launch in 2011, Barry Bausano, co-head of global prime finance, told Bloomberg News. And as many as five of those funds could be in Asia, where one billion-dollar fund—Azentus Capital—has already debuted.
"If you are looking at making a long-term systematic alternative investment to Asia, the limited availability of products with scale is pretty striking," Bausano said. "When you have high-quality, experienced investment professionals of this caliber, they're going to attract significant assets."
And not just at inception: Bausano predicts that "we're going to see some very sophisticated, globally competitive Asia-based hedge fund complexes running capital in the US$5 billion range with the next several years." Currently, there are no funds of that size in the region.
"It reflects the macro-economic situation that has developed globally," Bausano said, in which hedge funds play an increasingly large role. Demand from pensions and other institutional investors will likely push global hedge fund assets into the US$3 trillion range by the end of 2013, he predicted.
"If your asset-liability mismatch is growing because of demographics, you need to ensure that part of your portfolio incorporates higher-yielding assets, like hedge funds, to close the gap," Bausano explained.