An end to the Volcker Rule, part of the US Dodd-Frank Act, could drive flows into alternative assets in Asia. But a return to pre-2008 levels of investment by US banks is seen as unlikely.
But getting investors to allocate more capital to the asset class may rest on a more rational approach to fees, says manager selection specialist Robert Mullane.
As many asset owners pull money out of hedge funds, the likes of Australia's Future Fund and Korea's National Pension Service are prepared to go against the trend.
Many asset owners are pulling out of hedge funds, dismayed by their relatively high fees and low returns. Others, including some Asian institutions, are reviewing their allocations.
Some argue that hedge funds will benefit both from the support of US president-elect Donald Trump and increased volatility. But many institutions are reluctant to invest in them.
More industry experts are voicing concerns about Hong Kong's planned fund manager conduct rules, saying the city risks losing business to its main rival.