Aberdeen AM FoHF division eyes more Asian allocations

Aberdeen Asset Management’s fund of hedge fund business is taking a closer look at Asia with an eye to increasing its exposure to managers based in the region, according to Andrew McCaffery, its global head of hedge funds.

Some of the UK firm’s global FoHFs have existing investments in Asian hedge funds, notes McCaffery, who is based London. The proportion has the potential to grow in coming years due to the increased number of funds based in the region and also the greater selection of strategies, diversifying away from equity long/short.

“It gives us more opportunity to view managers as being a key element of our portfolios, or even more so, over time,” he adds. Aberdeen’s FoHF business manages about $5.5 billion across multiple funds, including one focused on Asian managers that he declines to name.

Next year, Aberdeen plans to appoint dedicated FoHF staff in Asia to meet hedge fund managers and gather market information. “We see Asia, and also Asian managers, as a great opportunity,” says McCaffery.

In the longer term, Aberdeen intends to offer segregated mandates on its FoHFs to Asian investors – an option that has been provided to a few clients in Paris and London through its internal platform. “That’s something we would like to expand to a global [service], rather than just a European one."

Investor demand for segregated accounts by hedge funds is growing due to the greater transparency they offer, according to service providers.

It is part of Aberdeen’s initiative to grow its FoHF investor-base in Asia, which McCaffery estimates comprise about 5-10% of the global total.

“There are sovereign wealth funds and government-related entities [in the region] that continue to see significant growth,” he says. “We would like to think that as they develop their exposure to different areas of the market, we could work with them either as manager or adviser.”

Aberdeen’s FoHF business accounts for a relatively small proportion of the firm’s total alternative investment division, which runs about $40 billion AUM. Aberdeen AM runs a total of $280 billion in assets. 

McCaffery, who joined Aberdeen AM in April from UK hedge fund BlueCrest Capital Management, is overseeing the firm’s FoHF group on a global basis.

“We feel that Asia is a great area not only to increase investment opportunities, but also to increase our investor base for our business,” he adds. “Today, when you look at the hedge fund industry, it’s still heavily oriented towards the east coast of the US and London. That is changing, but it will take time.”