Closing Bell

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Closing Bell

Big Money '07: Asia-Focused Hedges to Outperform

Roughly $110 billion flowed to the more than 9,200 hedge funds in 2006, according Chicago-based firm Hedge Fund Research. Senior managing director of Channel Capital Group George Lucaci was on “Closing Bell,” explaining which funds made the most money this year. He also highlighted what to look for in 2007.

After a week start in the first half of 2006, hedge funds rebounded later in the year, says Lucaci. The best performers were in the emerging markets – Asia, and China specifically, did the best. Lucaci expects Asia to outperform next year as well, with a strong showing from Japan this time around.

Commenting on the U.S. Securities and Exchange Commission’s recent focus on hedge funds, Lucaci drew attention to the high level of transparency in that sector compared with most people’s 401k accounts. Most people don’t know their retirement money manager, he says. But with hedge funds it’s different.

“Investors, when they do invest in hedge funds, they’re doing their due diligence, they’re meeting the manager,” Lucaci says.

According to Lucaci, the biggest effect of the SEC’s new minimum requirement to invest in hedge funds – a $2.5 million net worth, up from $1 million – will be felt mostly in smaller “funds of funds.”