Asia-focused hedge funds say aloha to Hawaii

Mon., Jan 14 - Financial Times

By Andrew Ward

The US state of Hawaii is showing signs of becoming a centre for Asia's hedge funds, especially for managers who are fed up with Japan's slow and heavy-handed regulators but do not want to move to Singapore or Hong Kong.

People in the industry say that about 10 hedge funds are operating in Honolulu, the state capital, and that there could soon be as many as 10 more, attracted by the US legal system, low property prices, English as the main language and a laid-back lifestyle.

The islands have strong links with Asia. There are large communities of Asian Americans living there and many have good skills in Asian languages.

"I can tell you there is a burgeoning hedge fund industry there," says Craig Asche, the executive director of the Chartered Alternative Investment Association. He has been contacted by members wanting to set up a chapter in Hawaii, he says.

It is perfect for managers who like to get up late and work into the evening while dealing with clients in Japan, but who do not like Asia's "buttoned up" attitude to business.

"I know fund managers who go surfing in the morning before going to the office," says Jason Bellamy, chief executive of Bellamy Fund Management, before admitting that he is wearing "a T-shirt and flip flops" in the office.

When he arrived in Hawaii eight years ago, there were one or two hedge funds operating there.

The industry has expanded in the past three years in particular and he says he hears of a new hedge fund opening "once a quarter".

Hedge funds were born in the US, and the country is still one of the friendliest for the industry. Capital is relatively easy to find, and entrepreneurs are welcome.

But Honolulu is still a long way from big capital markets and services such as prime brokers. Although many Hawaiians may eventually want to return to their home state after working in New York, London, Tokyo or Hong Kong, at the moment there is not a big pool of talent to draw from.

Each US state has its own regulations and thresholds for registering investment advisers, and people in the industry complain that Hawaii's government is unwilling to cut red tape.

Hawaii's house of representatives did pass a resolution in 2006 recognising the value of attracting fund managers to the state, and supporting the development of the industry. But little concrete action has been taken.

Mr Perez says hedge funds have a lot to gain by moving to Hawaii. "I think it is going to make sense for that segment of the hedge fund industry that is Asia focused," he says.

"We know we will never topple Hong Kong or Singapore but if we get united we might be able to carve a little niche for ourselves."

As also seen in Gulfnews