Investments in Asia hedge funds halved

By Saeed Azhar

SINGAPORE (Reuters) - Investors almost halved the money they put into Asia-focused hedge funds in the second quarter compared to the first three months of the year as a selloff in stocks hurt appetite for risky assets, data showed.

Asia-focused hedge funds received a net $530 million (268 million pounds) from investors in the April-June quarter, down from $1 billion in the first quarter, Chicago-based Hedge Fund Research said in a statement released late on Thursday.

Asian hedge funds grew by approximately $200 million to $100.48 billion, up just 0.25 percent from the first quarter, as inflows were mostly offset by a decline of nearly $320 million due to poor performance.

"Asian hedge fund investors reacted to continuing market volatility by adjusting allocations opportunistically to those regional markets that had posted sharp year-to-date losses," said Kenneth Heinz, president of Hedge Fund Research.

The bulk of Asian hedge funds are focused on equities rather than macro-strategies such as those investing in currencies, which outperformed stocks this year.

Other analysts said managers of small funds could suffer more from market turmoil than large funds that are still attracting cash, with a greater investor focus on governance.

For example in late April Hong Kong-based distressed debt specialist ADM Capital said it has raised $418 million with the launch of a fund, helping the hedge fund manager to boost its overall assets to $2.4 billion.

"Generally what's happening is that the large institutional managers with respectable numbers are still seeing inflows, but the smaller managers are seeing almost nothing," said Peter Douglas, founder of hedge fund consultancy GFIA.  Continued...