HONG KONG |
Mon Feb 7, 2011 4:04am EST
HONG KONG (Reuters) - Mid-sized Asian hedge funds are poised to
receive major money inflows this year, as some of the region's
largest managers shut doors to new investors on fears that running
bulky portfolios could harm returns.
Industry tracker Eurekahedge estimates that in 2010 nearly 30 Asia
focused funds stopped accepting money from new clients, in what is
also known as a "soft close". This compared with around 15 in 2009.
That means that this year, there is potentially more money sloshing
around for Asia's mid-sized hedge funds, which typically manage $50
million to $250 million (155 million pounds).
These funds are expected to benefit from the overflow, in turn
boosting the size and clout of the $125 billion Asia hedge fund
industry.
"Given the increase in the number of managers that we are seeing soft
close, we expect investors will turn their attention to some of the
newer and smaller managers that have launched in the last 12-18
months," says James Fallon, director, financing sales, at BofA
Merrill Lynch in Hong Kong.
The impact of the so-called "waterfall effect" remains to be seen and
analysts say it is hard to estimate the size of the potential
overflow.
Still, fund managers, analysts and prime brokers say that should the
mid-size funds reap the benefits of such an overflow, the phenomenon
would set the stage for the industry's next phase of growth.
Not only will it lift the size of the funds, but a growth in assets
for the middle players could increase investment options for
institutional investors, and expand fee opportunities for service
providers such as consultants and prime brokers.
Farhan Mumtaz, a older analyst at Eurekahedge, estimates the main
beneficiaries of the asset overflow from the closed huge hedge funds
would be those administration $100 million or more.
Source: Reuters.Com
