Hedge funds across the board faced a rough year through 2008, with Asian managers being no exception. The average Asian hedge fund, as measured by the Eurekahedge Asian Hedge Fund Index, fell 21.1% in 2008, with the region’s hedge fund industry shrinking by nearly US$50 billion (28%) in terms of assets. Based on the data of over 1,1601 hedge funds in the Eurekahedge Asian Hedge Fund database, we estimate the size of the Asian hedge fund industry at 1,117 funds managing US$126 billion in assets as at end-2008.
Interestingly, although assets have fallen by 28% in 2008, the number of funds in percentage terms has fallen by only 6.6%. This can be explained as:
a) large-scale redemptions out of hedge funds (US$23.6 billion in 2008) tend to cause a delayed response in fund closures by a few months, as losses accrued impact profitability in the long run; and
b) there were nearly 90 fund launches (partly) making up for the closure of close to 170 funds in 2008.
