Some hedgies may choose to dodge high-water marks

If its money that floats your boat, then the fact that over one-third of Asia's hedge funds are more than 30% below their high-water marks is likely to encourage  non-partner professionals in Asian funds to launch their own firms rather than wait until their current employer is in a position to pay bonuses.

This is the prediction of Singapore-based hedge fund consultancy GFIA in its current overview of Asia's hedge fund sector.

GFIA estimates that there are currently 25 managers in Asia that still have assets under management in excess of $1 billion. It also estimates that the total size of Asia's hedge fund industry is $115 billion comprising of 692 hedge funds. Of those funds, 382 have more than $50 million under management.

There were 60 new Asian hedge funds launched in 2008 raising on average $25 million, and according to AsiaHedge, 104 funds were wound up during the year. This implies that 2008 was the first year in which there was a net decrease in Asian hedge funds. GFIA says that the favourite headline announcing a 'billion dollar launch' is highly unlikely now and for the foreseeable future. It has had many conversations with would-be managers who have shelved or re-thought their launch plans.

GFIA also predicts that London and the US will continue to lose market share as it believes Asian-based hedge fund managers will produce better performance figures. GFIA reckons that local managers have access to better information and that this should lead to better returns, though it concedes that this deduction comes mainly from intuition.