Bloomberg – Value Partners Group Ltd., Asia’s second-largest hedge fund manager by assets, said worsening returns in the industry may lead to bigger firms taking over smaller rivals.
“I think the industry may go through certain consolidation,” said Chief Executive Officer Franco Ngan in an e-mail. “Our company is financially strong and will keep an open mind to explore if appropriate opportunities arise.”
Asian hedge funds, dominated by equity-focused managers, have struggled with negative returns and redemptions this year, after the end of a five-year stock rally. Hong Kong’s Hang Seng Index has tumbled 23 percent from an Oct. 30 record and Japan’s Topix index has fallen 19 percent in the past year.
Eurekahedge’s Asian hedge fund index dropped 5.2 percent this year, based on preliminary data for May. That’s the worst start to a year since the Singapore-based company began compiling data in 2000, and the worst performance among six regional indexes Eurekahedge compiles.
Smaller, younger firms that have never weathered a market slump may struggle to attract and retain money as the global fallout from surging home loan delinquencies in the U.S. erodes appetite for risk.
“Institutional investors are becoming more and more demanding in terms of proper infrastructure such as risk control, compliance, operation, information technology, client services and reporting,” Ngan said. “The situation is more challenging for smaller boutiques with a relatively short track record.”
