Hong Kong and Singapore have doubled in size as centres for the world’s biggest hedge funds over the past 12 months — at the expense of London and New York.
According to data due to be released today, the Asian cities are home to 18 hedge funds managing more than $1 billion – an industry benchmark for success — compared with just 10 a year ago.
London is home to 63 managers running assets of more than $1 billion, while New York remains the hedge fund industry’s leading centre, with 128. However, the two cities have continued to see their share of hedge fund assets slide.
New York accounts for about 45 percent of hedge fund assets, down from47 per cent last year. London accounts for about 14.5 percent, compared with 16 percent last year.
The figures, compiled by Hedge Fund Intelligence, the industry’s biggest manager database, show the extent to which cities in or close to emerging markets — particularly in Asia — are at the forefront of industry expansion.
The trend should accelerate in the coming months, many managers say.
Hong Kong in particular has seen a series of high-profile launches recently; all of which are likely to break through the $1bn mark this year.
Most notably, Morgan Sze, the former head of Goldman Sachs’ proprietary trading operation GS Principal Strategies, is to launch his new hedge fund, Azentus, from the city.
The launch is expected to raise up to $1.5 billion, which would make it the largest global hedge fund start-up since 2007.
Carl Huttenlocher, who until several weeks ago ran New York-based Highbridge Capital’s $1.4 billion Asian Opportunities fund, is also expected to make waves with a large fund launch this year.
Existing firms likely to break through the $1 billion mark include the $700 million Janchor Partners, run by John Ho, former Asia head of activist group TCI. Janchor launched only at the beginning of 2010.
Where new managers may previously have had headquarters in hedge-fund friendly locations such as London or America’s West coast to invest in Asia, most now choose to be on the ground in the region.
Both Hong Kong and Singapore have worked hard to cultivate the kind of lightly-regulated, low-tax environments hedge fund managers prefer.