GFIA Pte, the Singapore-based hedge-fund firm and consultant, said it stopped coverage of most Chinese hedge funds because they lack transparency and sold all of its investments with mainland Chinese managers, says Bloomberg.

The value of GFIA’s China-dedicated funds peaked at about US$3 million ($4.23 million), 10% of its portfolio, Peter Douglas, GFIA’s principal, said in a telephone interview. Douglas shifted coverage to Hong Kong-based managers with experience in the financial industry outside of Asia, from those in mainland China, he said.

 

“A hedge fund is really all about the people behind it, and less about where the firm is, the structure, and all the rest of it,” Douglas said. “The problem is there is no deep culture of openness and transparency in China. If you’re running a more qualitative risk-management approach, you really need a breath of qualitative information.”

 

GFIA’s decision to stop covering managers in the country comes as Chinese hedge funds benefit from a market recovery spurred by economic growth. GIFA has been researching China hedge funds since 2004.