Chinese hedge funds enter second generation with greater flexibility

Thu Jul 19, 2012



Despite a difficult year, hedge fund managers in China are heartened by the ongoing renminbi liberalisation and new measures to lower the barrier to entry


Julius Wang
Paul Hefner
Brenda Tse
Chinese hedge funds have come a long way from their early days. Managers are now more diverse, follow a greater variety of strategies, and are more likely to hedge. Moreover, China's gradual liberalisation of the renminbi promises to open up opportunities for Chinese hedge funds, managers and investors alike.

Though Chinese hedge fund managers still mainly follow an equities long/short strategy, not all funds are long-biased now-adays. The first generation of Chinese hedge fund managers typically came from a unit trust or mutual fund background. But starting from around 2008, managers were more likely to have spent time at a hedge fund before starting their own business. "The second generation is more flexible and adaptable to market opportunities," says Julius Wang, head of Samena Asia Managers.

"Many of the start-ups who launched last year are actually running market-neutral exposures, both as a function...

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