The rising sun of hedge funds
There are definitely opportunities for funds of hedge funds (FoHF) wanting to invest in Asia; the biggest challenge is how to generate attractive returns, according to Gottex Fund Management.
Peter Bennett, a senior managing director and head of Asian business at Gottex, was a guest speaker at the Select Investment Forum in Sydney yesterday.
“Opportunities for absolute returns exist in the Asian market. They are not as developed as in the US market and most returns are correlated to market beta,” Bennett said.
Bennett said that in the past a diversified portfolio of Asian hedge funds delivered higher absolute returns with significantly less volatility than broad Asian equity benchmarks.
The growth of economies such as China and India is evidence that Asia will be a major driver of world economic growth in the future.
“In 1950 Asia accounted for more than half the world’s population, but contributed less than 20 per cent GDP [gross domestic product]. Projections by JP Morgan Planning show that by 2020, Asia will represent over 50 per cent of global GDP,” Bennett said.
Bennett said Asian markets are likely to experience growth, but with significant volatility.
“Funds of hedge funds can offer exposure to both beta and alpha in Asian markets, but with decreased volatility,” Bennett said.
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