Hong Kong’s hedge fund industry remained robust

Hong Kong’s hedge fund industry remained robust.

The number of hedge funds managed by SFC-licensed hedge fund managers in Hong Kong stood at 538 as at 30 September 2010, nearly five times the level in 2004, the year our hedge fund surveys started.

The total hedge fund AUM in Hong Kong increased from US$9.1 billion in 2004 to US$63.2 billion in 2010.

Hong Kong hedge fund managers mainly adopted Asia Pacific-focused equity long/short strategy and multi-strategy. Overseas institutional investors made up a majority of the investor base. Equity long/short strategy and multi-strategy remained the most popular strategies. With respect to multi-strategy, the most common underlying strategies were equity long/short, event driven and convertible bond (CB) arbitrage.

The investments mainly focused on the Asia Pacific markets, which accounted for 66.1% of the total hedge fund AUM. The Hong Kong and Mainland China markets alone made up 26.7%. Investors were mainly from overseas, and Hong Kong-based investors only constituted 7.9%. Major investor types were fund of funds and other institutional clients, such as banks and insurance companies.