- Summary: With the spread of popularity in using hedge funds to play emerging markets the use of databases is also gaining popularity. However, potential investors need to understand that the data is typically provided directly by hedge funds with almost no verification. An independent investor consultant advising on hedge fund investing from Singapore suggests such databases are a 'starting point for due diligence' but not the 'gospel for how a hedge fund is doing.'
- Comment on related stocks/ETFs: The article mentions three hedge fund database companies (HSBC AsiaHedge of the UK, HedgeFund.net of New York, and Eurekahedge of Singapore), two of which (AsiaHedge and Eurekahedge) pretty much admit their data is unverified and shouldn't be relied on exclusively to make investment decisions. The IHT.com reports today that Moody's (MCO), S&P, and Fitch are simultaneously but separately developing a system to rate hedge fund managers. The rating is specific to the fund manager and so-called operational risk but doesn't cover "... the creditworthiness of hedge funds or the effectiveness of an investment strategy" according to Moody's. Less than a month ago a WSJ Heard in Asia article discussed how hedge funds are struggling this year in Japan, largely due to volatility and especially in smaller-cap stocks. Lastly, the SEC on hedge funds and funds of hedges funds.
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