Hedge fund industry seeing influx of capital

Dubai: The Dubai International Financial Centre (DIFC) has said the hedge fund industry is seeing an "influx" of private and institutional money from the region and the city could become a new centre for the industry.

At present three hedge funds are domiciled at DIFC but officials hope Dubai can attract more funds.

"We are hoping to grow Dubai into a new hedge fund centre for the region," DIFC governor Omar Bin Sulaiman said.

"The outlook for hedge funds and other alternative investment classes in the region is expanding. At the DIFC we have put in place both the infrastructure and the regulatory framework to foster the growth of hedge funds," he said.

The global hedge fund industry had an estimated $1.2 trillion under management in the middle of 2006, according to published industry figures. The number of funds at that time was about 9,000.

There are no authoritative figures available on the Middle East's hedge funds.

Investment practices of hedge funds have been often criticised due to their lack of regulation and lack of transparency.

Man Investments Middle East Limited, a Dubai-based firm, says more laws to regulate hedge funds will help in getting rid of unscrupulous operators.

"We want more regulation. 'Mickey Mouse' fund managers will disappear if there is more regulation and legislation," chief executive officer Antoine Massad told reporters on the sidelines of a hedge fund conference in Dubai yesterday.

DIFC's executive director for asset management Sandy Shipton said he favours a "light-touch regulatory regime."

"The industry is recognising some need for regulation. But I do not anticipate regulators getting involved in more than an overview when it comes to regulating products," he said.

The DIFC is home to 111 companies and 60 are involved in the asset management business.