It was a race to see who would be first but, in the end, only a few days separated the launch of two new indices tracking the Asian hedge fund market. The first announcement came on Friday when Singapore-based Eureka Hedge Fund Advisors launched its Asian Hedge Fund Index.

Then on Monday the joint venture between Bank of Bermuda and AsiaHedge revealed a series of four indices tracking long/short performance in four geographical locations. But while the timing was close, the indices look poles apart in structure and form.

EurekaHedge has branded its tracker an "investible" index with six sub-indices broken down by strategy and region. The index shows the mean return of the population covered and excludes any funds that are full and closed to investors or those that have less than $40 million in assets under management.

The indices launched by Bank of Bermuda and AsiaHedge take the performance of long/short funds in four geographic categories - Japan, Asia ex-Japan, Asia inclusive of Japan and Australia. They don't exclude any funds by size or accessibility and the index is calculated using median rather than mean performance.

Its indices are being labeled as "benchmark" indicators, giving investors a feel for the performance of the entire sector. Creating indices to track hedge funds is a tricky business. First there is the problem of getting traditionally secretive hedge fund managers to share their data and then there is the process of differentiating between the number of different strategies employed by hedge fund managers.

Finally, there is the discrepancy in the flow of information - hedge funds tend to have unique redemption rules and calculate their NAVs at different dates on the calendar. Eureka's director of research, John Hertherington, acknowledges the difficulty in monitoring the performance of hedge funds.

"While an index is a contradiction for absolute return funds, investors still want to know how individual funds performed against their peer group," he says. "We therefore decided that it was important to create an index which both hedge funds and investors will benefit from."

He says the EurekaHedge index will be re-balanced periodically as smaller funds grow their assets and constituent funds close. New constituents will be priced in at the prevailing index level in order to maintain performance consistency.

The Bank of Bermuda and AsiaHedge product deals with the myriad of investment strategies by focusing only on long/short funds. "In our view there just aren't enough funds in any of the other categories to give a true indication of performance in those groups," says Paul Storey at AsiaHedge.

Just how accurately the two new indices will reflect the performance of local managers is yet to be seen. Both exclude the top performers in each market - EurekaHedge by discarding funds that are closed to investors and Bank of Bermuda/AsiaHedge by using the median. The other thing they share in common is their direction.

EurekaHedge's main index started at a base of 100 points in December 1999 and had grown by 17 points in February 2002. At the same time, the Bank of Bermuda/AsiaHedge Japan long/short index, being the index with the largest number of constituents, grew by 7.03% from December 2000 to February 2002.

Both companies are offering the indices online.