In one of its regular analyses of developments in the hedge fund industry, the German bank said it has seen a regular flow of wealthy Chinese and European persons creating family offices in Singapore to gain exposure in the region.

There is a “steady stream” of individuals from China and Europe using Singapore as the base to set up family offices as part of how they gain Asian exposure, according to Deutsche Bank in its regular analysis of hedge fund trends.

The Frankfurt-listed banking group, in a regular commentary on hedge fund trends, said: “The Asian Hedge Fund Capital Group continues to see a steady stream of high net worth individuals from China and Europe, including the UK, Switzerland, and Sweden, setting up family offices in Singapore to expand their exposure in Asia.”

The report goes into the kind of institutions and people it sees as active in the hedge fund space, and noted involvement by family offices in Asia and their changing return requirements.

“Their target risk-return profile for hedge funds is still higher than that of the institutional investors; however, we are seeing some family offices lower their return expectations to 5-7 per cent and favouring managers who can provide less-volatile returns.

"Uncorrelated strategies such as global macro, CTA [commodity trading advisors], and market neutral strategies continue to be their most preferable strategies,” the bank said in its Global Prime Finance Monthly Hedge Fund Trends report.

The bank noted that in general terms, hedge funds have languished, with most funds ending up flat for the month of October. Deutsche Bank said it expects a number of headwinds to persist as investors fret about when the US Federal Reserve finally raises interest rates, and concerns about regulatory interference with mergers and acquisitions.

According to a recent UBS survey, family offices in Asia-Pacific had an average of $480 million assets under management in 2013 and participating family offices in Asia manage over $20 billion in private wealth.

There could be anywhere between 100 and 200 family offices in Asia, according to a report last year published by INSEAD, the business school, and Pictet, the Swiss private bank (it sourced data from VP Bank and University of St Gallen, among others). 

In other details, when giving its impressions of what US clients of hedge funds are looking for, Deutsche Bank gave the example of a meeting it had with 18 investors in Texas who between them oversee $80 billion in assets. Those investors included family offices, fund of funds and foundations. 

“The active allocators are interested in uncorrelated strategies, singling out fundamental equity market neutral and discretionary macro. We did also observe some interest in sector-focused equity long/short managers with a focus on healthcare, TMT, and consumer. While the majority of investors are looking for managers with a global focus, there was a select subset enquiring after Asian managers,” Deutsche Bank said.