Investing in Asian Hedge Funds: Opportunities and Challenges
Asia’s economic development continues to attract global investor’s interest. Yet, investing in Asia-focused hedge funds has proved challenging due to illiquidity, shorting constraints, and underdeveloped legal systems. This report takes an in-depth look at four strategies (long/short equity, credit opportunities, event-driven, and macro), highlighting the challenges each faces and the opportunity set available. All things considered, long/short equity and macro strategies present the most interesting prospects, event-driven and liquid credit strategies less so. We remain cautious on broad implementation in the near term; liquidity and governance drawbacks in most cases outweigh the benefits of geographic diversification and market inefficiency.
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