Press Comment
Contacts: | Louisa Bartoszek | Christine Wood |
+44 20 7163 2826 | +852 3768 4557 | |
louisa.bartoszek@bnymellon.com | christine.wood@fticonsulting.com |
• Deep-seated economic fears bringing rise to increased investor demands
• Vibrant Asian hedge fund community, mid-sized funds growing faster than before
• Delayed monies released in Q4 brings optimism in tough fund raising environment
HONG KONG, 12 January 2012 - Andrew Gordon, Head of BNY
Mellon's Alternative Investment Services in
Asia looks at the factors defining a 'new normal' for the
Asian hedge fund industry in 2012.
"We have been watching the continued growth and success,
particularly amongst mid-sized Asian hedge funds, throughout
2011 with interest. The defining characteristic of these
funds has been an intense focus on good governance,
especially around counterparty risk. Fears around a global
financial crisis have been so deep-seated that hedge fund
managers have had to find a way to satisfy the risk
management requirements of investors originally raised after
the 2008 financial crisis, leading to a 'new norm' in the
institutionalisation of the hedge fund industry in Asia."
Prime Custody Takes Off
"Prime custody has become the hot product of 2011, especially
since the second quarter of this year when concerns around
the global economy resurfaced. Specifically, Asian hedge
funds have bought into using multi primes and segregated
custody accounts for unencumbered assets. Prime Custody
certainly kept us busy during 2011, and I expect that to
continue well into 2012. Funds making the decision to utilise
this type of protection are viewed as having institutional
quality infrastructure.
"More sophisticated prime custody services are also helping
hedge funds improve execution and collateral management,
reducing financing costs and enabling efficient reporting in
one place. There are also benefits to be had in utilising
these assets in securities lending programmes.
"Going into 2012, economic uncertainty is not the only reason
hedge funds are spending more time and money on good
governance and to protect against counterparty risk. New
regulations in many jurisdictions around the world and the
bankruptcy of MF Global are continuing to sharpen the focus
on the non- investment aspects of how a fund is managed.
Industry participants are looking to see if they can do
things better and this is something that will ultimately
drive the hedge fund industry and the markets."
Health of the Asian Hedge Fund Industry
"Despite a tough fund raising environment everywhere in 2011,
Asia experienced a solid year. The average size of a fund
launch in Asia in 2011 was the same as Europe, for the first
time, at around US$40 million.
"Mid-sized funds did very well in Asia although we should
note that these figures are flattered by the success of a
small number of new, larger hedge funds in the region.
Overall the number of funds in the medium to large category
is definitely growing.
"Across all Asian hedge funds, most fund launches raised less
than initial targets or were delayed. We also saw the
continuation of the closure of small funds but we believe
this remains a positive sign of vibrancy of the Asian hedge
fund industry.
"Redemptions were not as bad as people feared and some
allocations to Asian managers which had been delayed started
to come through towards the end of the year. There is
certainly less leverage in the system today compared to 2008,
so less of a need for investors to realise cash.
"In 2012 we believe that the fund raising environment will
continue to be difficult even though indications are that
allocations to emerging markets are holding up. In Asia, the
threat of the continued withdrawal of big European banks will
create opportunities but if these assets start to be sold in
falling markets there could be a knock-on effect in Asia that
would pose a danger to the growth we've been seeing in the
Asian hedge fund industry.
Press Comment
"In Singapore, plans to introduce new regulations for hedge funds in early 2012, which would put them on a par with major global financial centres, include engaging independent administrators. These confidence factors are another step in the direction of the new normal for hedge funds in Asia that embrace good governance and should aid in the release of money from institutions thus creating a stronger industry."
Notes to editors-ends-
BNY Mellon Alternative Investment Services - a leading service provider for alternative assets, including single manager hedge funds, funds of hedge funds, and private equity - has more than $500 billion of assets under administration and an extensive global presence, including locations in Bermuda, the Cayman Islands, Guernsey, Hong Kong, Ireland, Japan, Luxembourg, Poland, Singapore and the United Kingdom, as well as U.S. offices in five states. In addition to alternative asset administration, BNY Mellon offers a wide range of cash management, foreign exchange, collateral management, trust, operational outsourcing and custody services to the alternative investment industry.
BNY Mellon is a global financial services company focused on helping clients manage and service their financial assets, operating in 36 countries and serving more than 100 markets. BNY Mellon is a leading provider of financial services for institutions, corporations and high-net-worth individuals, offering superior investment management and investment services through a worldwide client-focused team. It has $25.9 trillion in assets under custody and administration and
$1.2 trillion in assets under management, services $11.9 trillion in outstanding debt and processes global payments averaging $1.6 trillion per day. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation.
Additional information is available on www.bnymellon.com or follow us on Twitter @BNYMellon.
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