Bloomberg – Asia hedge-fund closures jumped 19 percent this year, with the industry set to shrink for the first time as clients withdraw more money after funds in the region underperformed rivals in the U.S. and Europe.
“It is likely that we’ll see a net reduction in the number of Asian hedge funds through this current year,” Peter Douglas, principal of Singapore-based hedge fund consulting firm GFIA Pte, said in an interview yesterday. “Almost without exception, the managers that we talk to in Asia are seeing capital outflows, some of it is minor, some of it major.”
About 70 hedge funds in Asia have shut down as of August, an increase from 59 in the first eight months of last year, according to Eurekahedge. There are 618 Asia-focused managers managing 1,199 hedge funds, compared with 1,196 funds in December. Assets under management fell to $168 billion in August, from $176 billion at the end of 2007, according to the Singapore-based hedge fund research and publishing company.
Asia’s hedge-fund managers — more than half of whom trade only equities — have underperformed their U.S. and European counterparts whose more diverse strategies allowed them to profit from turmoil in financial markets. Asia’s hedge-fund average returns fell 12.6 percent this year, compared with declines of 0.1 percent in North America and 5.8 percent in Europe, Eurekahedge said. Asia gained 18 percent in 2007, outperforming both regions.