Institutional investors in Asia are increasingly finding that structured products are a useful way to buy exposure to hedge-fund returns. Driven by market volatility and a greater focus on capital treatment, insurers and financial institutions are increasingly buying funds of hedge funds with principal protected wrappers. They are also using derivatives and structured products to switch hedge fund investments into their local-currency allocation or even to make them Shar'iah-compliant.
It may not have been a great year for hedge funds so far, but investment banks and asset managers in Asia say that there is still strong growth in demand for structured ways to invest in alternative strategies.
Regulatory requirements are a big driver. Under...
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