HONG KONG - Asia-focused hedge funds slightly increased the value of the assets they manage to $144 billion in the first half of the year, helped by a few large start-ups in Hong Kong even as the industry in Singapore and Japan shrank.
Assets rose 2.5 percent, or $3.5 billion, as of the end of June compared with six months ago, a survey by industry tracker AsiaHedge showed on Friday. That was in line with the 2.4 percent return seen in the Asian hedge funds measured by the fund tracker.
The Asian fund industry is struggling to improve returns as the slowing global economy and European debt crisis weigh on stock markets around the world.
"The modest growth comes from a combination of inflows into some of the bigger launches of the past two years and existing managers as well as from a lack of significant redemptions from investors, who are holding their fire despite some lacklustre returns - at least for now," said Aradhna Dayal, head of Asia for HedgeFund Intelligence in Hong Kong.
Start-ups in Hong Kong such as Asia Research & Capital Management and Tybourne Capital Management raised millions of dollars in the first half.
That helped boost the overall assets held by hedge funds in the city by $6.5 billion to a record $47.1 billion, according to the survey by AsiaHedge, which is part of U.K.-based HedgeFund Intelligence.
Assets under funds in Singapore fell by just over $1 billion to $19.8 billion in the first half, while those in Japan saw assets plunge by 41 percent to $5.72 billion, the survey showed.
"Unless Asian managers can bring in the same outlier returns that attracted investors to Asia in the first place, there is a possibility that we will see capital flow back to the recovering U.S. or to Europe, which appears to offer considerable value-driven investment opportunities at present," Dayal said.
The number of hedge funds in Asia rose to 816 from 788 at the end of 2011.
About 78 percent of the Asia-Pacific hedge fund industry assets are now managed from Asia, a major change from the past when a majority of the assets were managed out of the United States and London.