Smaller Asian Hedge Funds Shunned Despite Big Gains

Date: Thursday, December 30, 2010
Author: HedgeFundBlogger.com

Size does matter, when it comes to Asian hedge funds looking to raise capital. Investors continue to give overwhelming preference to larger hedge funds over small hedge funds. But many small hedge funds like The Thai Focused Equity (Class A) and Albizia ASEAN Opportunities funds have made impressive returns only to be rewarded with meager inflows.

The fight for assets is likely to extend to 2011 as investors continue to shun smaller funds. Rising compliance costs will also crimp their ability to turn a profit and make it tougher for start-ups in Singapore and Hong Kong to grow.

The reluctance of institutional investors to park assets in smaller players could stymie the development of the $125 billion Asian hedge fund industry since small hedge funds have often been the source of innovative ideas in the West.

"It's been very difficult to raise money," said Jeep Chatikavanij, chief investment officer of Hunters Investments, whose $70 million Ton Poh Thailand Fund was up nearly 70 percent up to November in 2010, putting it in the third spot among the 11 Asia-themed funds on Lipper world's top-100 hedge funds.