Asia-focused hedge funds seen starting to attract inflows

* Asia ex-Japan funds getting inflows since Aug-Eurekahedge

* Larger hedge funds more successful in attracting money

* Industry data skewed by non-participation of some large
funds

By Kevin Lim

SINGAPORE, Nov 29 (BestGrowthStock) – Hedge funds investing in
developing Asia have begun to attract money from investors
after a poor first half of 2010 when many were hurt by
outflows despite strong interest in emerging markets, industry
players said.

Global investors have been pouring money into Asia in
search of higher returns since the start of the year, pushing
up currencies and fuelling concerns about asset bubbles. But
they took out about $1.6 billion from Asia ex-Japan themed
hedge funds between January and July, according to data from
Eurekahedge.

The trend has since reversed, with Asia ex-Japan focused
funds receiving around $250 million net inflows in both August
and September, said Eurekahedge, a Singapore-based fund
tracker. And preliminary data showed Asia ex-Japan focused
funds had inflows of just under $1 billion in October,
Eurekahedge analyst Farhan Mumtaz said.

“In the first half of the year, there were still net
outflows from Asian funds. But in the past few months, we have
started to see some inflows,” said Wout Kalis, Citigroup’s
head of alternative investments for the Asia Pacific.

“We are seeing some traction though the inflows are not
the same as what you see in the U.S. and Europe,” said Kalis,
whose unit provides services to the region’s hedge fund
industry.

Large, global hedge fund managers with Asian-themed funds
and staff in the region have been more successful in
attracting money than Asian managers, he added.

SKEWED NUMBERS

Asia-themed hedge funds gained an average of 1.99 percent
in October and are up 5.79 percent since the start of the
year, following a 26.59 percent return in 2009, according to
Eurekahedge.

Several industry players said the hedge fund industry in
Asia was probably healthier than available data suggested, as
several of the larger and more successful hedge funds did not
participate in industry surveys, hence skewing the figures
about inflows.

The industry is also set to grow further in Asia, as more
global players set up operations in either Singapore or Hong
Kong to trade Asian assets and curbs on proprietary trading by
banks force traders to strike out on their own.

“I would challenge the view that there is money flowing
out of the region, from Asian hedge funds… If you talk to
the eight, nine or so largest prime brokers, the balances have
gone up significantly,” said Christophe Lee, chairman of hedge
fund industry body, the Alternative Investment Management
Association’s (AIMA) Hong Kong chapter.

“Prime brokers are probably the best gatekeepers. They
know exactly what’s going on because they keep the balances of
the hedge funds,” he added.

The Singapore head of a European fund administration firm
said that while smaller players have difficulty raising funds
as investors shun firms without long track records, the larger
players have been successful in attracting new money.

Around 15 percent of managers controlled about 60 percent
of Asian hedge fund assets under management and “it is their
numbers that really determine the overall number”, said the
executive, who declined to be identified as talking to the
media was against company policy.

(Editing by Muralikumar Anantharaman)

Asia-focused hedge funds seen starting to attract inflows