Asian hedge fund industry contracts in "more pronounced" manner

CHICAGO, Feb. 9 (Chinese media) -- Capital invested in Asian hedge funds continued to fall in the fourth quarter of 2008, according to data released on Monday by Chicago-based Hedge Fund Research.

Asian hedge fund industry declined by nearly 16 billion U.S. dollars to just over 71 billion dollars, extending the trend of losses and withdrawals that characterized most of 2008.

Assets invested in Asian hedge funds peaked at 111 billion dollars at the end of 2007.

While assets declined both globally and in Asian hedge funds in the second half of 2008, the decline in Asia has been more pronounced, with assets invested in the region declining by 28.9 percent, while total industry assets declined by 27.1 percent.

For the full year, performance-based asset declines in Asian funds exceeded the assets withdrawn by investors. However, in the fourth quarter investor redemptions of 8.6 billion dollars exceeded the performance-based asset decline of 7 billion dollars.

"Despite full year performance losses for 2008, Asian hedge funds posted gains in December and some Asian equity markets have posted strong gains to begin 2009," said Kenneth J. Heinz, president of Hedge Fund Research.

"As investors perceive opportunities and risk tolerance recedes from extreme levels, we expect to again see leadership and growth from the Asian hedge fund industry," Heinz added.