Asian hedge-fund index debuts
HONG KONG, China (CNN) -- Fund tracker Eureka Hedge Fund Advisors has unveiled an index that tracks Asian hedge funds, in conjunction with ABN Amro.
Hedge funds, which often are not required to disclose their holdings, have become a hot topic in world finance, with about 5000 funds worldwide.
About $4 billion flowed into Asian hedge funds last year. The number of funds in Asia is growing rapidly, but most are still small, with half of them under $25 million in assets.
The ABN Amro EurekaHedge index announcement comes after the Bank of Bermuda and Hedge Fund Intelligence first promoted their hedge-fund indexes on March 25.
Both Eureka and the Bank of Bermuda claim that they have created the first Asian hedge-fund index. But the rivalry is friendly.
"We are just different paths of information," Joanne Murphy, head of hedge-fund marketing for the Bank of Bermuda, told CNN on Friday.
"Asia Pacific hedge funds have not been very well researched by the journalists of the world and the researchers of the world," she said.
Prominent in late 1990s
In Asia, hedge funds Farallon Capital Management of California thrust itself in the spotlight with its March deal to take over Bank Central Asia, the largest bank in Indonesia (full story).
Hedge funds came to prominence when Long Term Capital Management's collapse in the late 1990s rocked the U.S. economy.
The funds also came in for heavy criticism from Asian leaders such as Malaysia's Prime Minister Mahathir Mohamad for their perceived role in the 1997-98 Asian financial crisis.
"Unfortunately, hedge funds have historically been led by some sensational journalism," Murphy said. "We have higher industry standards and we have better information now."
The backers of the Eureka ABN Amro fund tracker also say their industry has suffered from a lack of exposure and a fear factor among the investing public.
Eureka culls the data for its index out of offices in Hong Kong and Singapore. Netherlands-based ABN Amro runs a hedge-fund trading desk in Hong Kong.
Interest in funds in Asia exploded out of Singapore last year. That has continued this year, particularly in Hong Kong, Australia and Japan.
Skills in research
Most hedge-fund principals are former investment-bank traders who branch out on their own. Their money comes from large institutional or private sources.
Eureka research director John Hetherington, formerly of HSBC Securities, said Eureka's founders originally considered setting up a hedge fund themselves but realized their skills lay in research.
Eureka so far tracks about 300 funds, 65 percent of them based in Asia. Around one-quarter of the Asian funds are in Japan, the region's biggest market.
The Bank of Bermuda does not compete directly because it acts as a fund administrator for hedge funds. It tracks their assets and releases that to approved investors.
It represents 84 hedge funds and believes there are about 180 Asian-oriented funds. Some are based in Asia but others just invest in the region, often from an office in the Americas.
ABN Amro spokesman Bruce Shu says the idea of the indexes is to dispell the "misconception" that hedge funds are risky.
The funds earned their reputation by using leverage to buy large chunks of the market. But he said there were funds for many tastes, including "funds of funds."
"There are different techniques, some investors just use it to outperform cash," Shu said.
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