Cost is a key element of launching a hedge fund -
particularly in Asia. The chances are that assets will not come
flooding through the door on day one, which means that keeping
costs down in the early stages is vital. If they get out of
control, they can cripple the venture.
However, the catch-22 for Asian managers is that cutting too
many corners will deter potential investors by making the
operation look amateurish. Furthermore, many of the cost
savings in the start-up phase will prove to be false economies
that have to be corrected later.
The irony is that the bigger and more credible the operation
looks, the easier it is to convince investors to stump up the
money. But if the gamble fails and the fund does not attract
investment, it will be left saddled with large start-up
expenses and overheads.
There are many examples of Asian funds that...