Huge Inflows Predicted For Asian Hedge Funds

Oct 8 2009 | 1:23am ET

Investors appear poised to pour more than half a trillion dollars into Asian hedge funds over the coming months, according to a new report.

Singapore-based hedge fund consultant GFIA is predicting that the Asian hedge fund industry will balloon to two or three times its peak at US$250 billion, set during the first half of last year. With industry assets down about 30% since then, that means that well over US$500 billion could enter the region’s hedge funds in a “wave” during the next nine months, according to GFIA’s Peter Douglas.

“The underlying fundamentals of Asia appear relatively strong currently, compared with the U.S. and developed Europe, and the consensus is that Asia’s long-term growth advantage will lead to Asia increasingly becoming the engine of the world’s growth,” Douglas told Bloomberg News. That means a wide array of investors previously unfamiliar with the Asian market—including Brazilian private banks, U.S. family offices and European institutional advisers—are set to enter the space in a big way.

“The main strategic wave will hit at the end of this year or the first half of 2010,” Douglas predicted. He noted that Asian hedge funds currently manage just about 10% of global hedge fund assets, although the region represents 25% of worldwide markets.

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