An Ernst and Young survey of 100 hedge fund managers has revealed industry consolidation and increasing costs related to greater regulatory oversight are the major challenges facing the industry in the next one to two years. In the year to date over 70 funds in Asia have closed despite an annualised return of 9% since 2008 in the Asian hedge fund sector. A number of funds have remained below their high water mark since 2008 and have therefore received no performance fees despite generating positive returns.
Increased risk aversion driven by concerns over the US 'Fiscal Cliff' and Eurozone debt concerns have seen asset flows slow with funds under management estimated to have fallen 30% on 2007 levels.
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