Commerz Capital International, a small fund manager registered with the Monetary Authority of Singapore, will launch in June a $100 million hedge fund, another sign that Asia has become the location of choice for the establishment of new hedge funds. Whether this is really a good thing, however, may be in doubt.

Commerz Capital principal and chief executive officer Kishore M said that in the last two years 60 percent of new funds launched were in Asia-Pacific and the hedge fund industry in this region was estimated to be worth $60 billion.

Yet, as the number of hedge funds continues to grow rapidly – Credit Suisse First Boston has estimated there are 7,500 hedge funds now globally compared to 2,000 funds in 1990 – their success in attracting investments may undermine their ability to generate the returns that attracted investors in the first place. That is if the returns were really as good as they have been made out to be.

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