Players are increasingly drawn to the prospect of consistent returns as the industry strives to become more transparent
Hedge funds seem to be drawing interest again as more institutional investors parked their money with the product, once deemed an aggressive investment tool due to its extensive use of derivatives and leverage.
In Asia, assets managed by hedge fund managers grew to US$21 billion last year from $10 billion in 2002, said Joel Katzman, the New York-based president and chief executive at JP Morgan Alternative Asset Management. He expects the trend to continue. But industry players are not worried of another bust like Long-Term Capital Management, as the regulators intend to set a regulatory framework to enhance the transparency of the once-secretive industry.
Some also suggested the change in investors' mentality had helped make the industry less aggressive.
A decade ago, about 80 per cent of hedge funds were focused on the global macro strategy, in which the fund managers hoped to profit from changes in global economies, typically caused by shifts in government policy that impact interest rates, in turn affecting currency, stock, and bond markets.
'But this macro strategy now only accounted for 20 per cent,' said Canyon Chan, vice-president and director of alternative strategies at Franklin Templeton Alternative Strategies in California.
