Asian Hedge Fund Industry Gets Crowded

Nov 16 2012 | 1:56pm ET

Despite an extremely difficult fundraising environment and a nasty attrition rate, traders aren't shying away from launching new hedge funds in Asia.

The number of hedge funds in the region hit a record in the third quarter, with 1,128 now active, according to Hedge Fund Research. But those funds are not having an easy time raising money: Total industry assets in Asia are up just 2.6% this year, and another regional hedge fund tracker, AsiaHedge, says that Asian hedge fund assets are down 30% from five years ago.

In addition, Asian hedge funds continue to close their doors. Seventy have done so this year already, with more expected to throw in the towel over the next six weeks.

Indeed, even HFR's asset numbers are not all they might have been: Hedge funds in the region actually added US$1.9 billion through performance in the third quarter, but investors still redeemed a net US$900 million.

"The Asian hedge fund industry continues to generate favorable performance dynamics, with the development of the industry toward more sophisticated hedge fund strategies contributing to increasing and consistent outperformance of regional and broad-based equity index benchmarks," HFR President Kenneth Heinz said.


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