International expansion: US hedge funds head to Asia
According to a survey by Tabb Group, one in four US hedge funds is planning to open a new office outside the US in the next two years. At least 400 offices will open in the next 12 months and, depending on market conditions, a further 400 in the next two years, says the report. The majority of funds opening abroad are multi-strategy. These need to move to markets in which investment opportunities arise.
Top of the list of places to go is Asia (ex-Japan). Forty percent of respondents with plans to open offices outside the US said the location would be in Asia. London was second on the list. More than a quarter of respondents listed the UK as a site for a new office.
This dispels the theory that hedge funds are opting out of London because of changes in tax treatment. Japan ranked third, and Europe ex-UK fourth. Australia and Canada were among other locations to be mentioned, where relationship-building and sales and marketing efforts are gaining ground to support markets where there is liquidity.
Portfolio management and research will be the main functions provided in the new locations.