Hedge funds in Asia up to 42% cheaper to run than in US: poll

[HONG KONG] Running a hedge fund in the Asia-Pacific region can be as much as 42 per cent cheaper than in the US and Europe, helped by lower-than-average compensation, according to a survey by Citigroup Inc.

Small funds started in the region struggle to achieve profitability and expand assets, the fourth-largest US bank cautioned. Ninety-five, or 57 per cent, of the 167 regional equity long-short hedge funds which began trading with less than US$50 million still manage less than that amount after an average of 5.3 years in existence, it added, citing data from Singapore-based Eurekahedge Pte.

"A critical success factor in the launch of a hedge fund is the size of assets under management at launch," Citigroup said in the regional supplement to its Business Expense Benchmark Survey. "Small fund launches in Asia have demonstrated a statistically reduced chance of accelerated assets under management growth."