A growing number of US hedge funds are setting up offshore, especially in Asia, as the maturing industry becomes increasingly global and funds look beyond US borders in a bid to boost waning returns.
Bear Stearns plans to launch a $450m fund investing in hedge funds that specialise in Asian markets, according to several industry members. The fund will allocate more than half the money to Japan, and also target China and India. And last week Tremont Capital, a big fund of funds with $10bn under management, became the latest to say it would open an office in Hong Kong to service its growing market in the Pacific Rim.
Bob Schulman, chief executive of Tremont, said: “There is a rapidly growing hedge fund community in Asia, and we also expect to serve a growing number of high net worth and institutional clients there.”
US funds began setting up in London about three years ago, and that trend continues, although the focus has recently shifted to Asia.
Goldman Sachs recently held a seminar aimed at helping the growing numbers of their hedge fund clients interested in setting up in Asia.
Bill Ullman, a senior managing director at Bear Stearns, said: “We are in the early stages of globalisation of the hedge fund business. We are seeing the rise of global alternative investment organisations such as Man Group. Many US-based hedge funds are increasingly looking to have sizeable non-US offices . . . London is seen as the first stage. Some have already moved on to Asia and Japan, and we have a couple of clients poking around India now.”
In the first half of this year, a record 55 new hedge funds launched in Asia, raising $3.5bn – more than double the amount raised in the same period last year, according to AsiaHedge.
The interest in Asia is also fuelled by the view that the region will offer the best opportunities for investment returns in the near future.
Randy Shain, whose BackTrack Reports group does due diligence on hedge funds on behalf of investors, said: “We have seen a big pick-up in work on managers in Hong Kong, Japan and Australia. We even had one in China. Funds of funds are telling us they are getting mandates to invest in Asia.”
Philip Vasan, the head of global prime services for Credit Suisse First Boston, said: “This has been a trend under way for several years. We’re seeing a move to globalisation, funds are looking increasingly across different markets.”
As hedge fund groups grow in size – several now top $10bn under management – there has been more cross-border investing as they spread their tentacles further around the globe.
Bear Stearns has five US hedge fund managers setting up in London at present, it says. Of the 100 biggest US hedge fund companies, 20 already have London offices.
London is seen as the gateway to Europe’s 25 stock markets, and also has a large talent pool of investment managers.
By Deborah Brewster
Source: Financial Times
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