Hedge funds and private banks together are driving the growth of fixed-income markets in Asia, according to Greenwich Associates. The new research report notes that because of a dearth of mutual funds, unit trusts and the like throughout the continent, individuals with their new-found wealth have turned to these two industries. Says Greenwich, “hedge funds from North America and Europe are moving en masse into Asia in search of new trading opportunities and new sources of assets,” and are having a “profound impact” on the Asian fixed income market. Evidence is in the numbers: There were 40 private banks and hedge funds in Greenwich’s sampling of the fixed-income investor universe in 2005; this year there are nearly 150. Among those hedge funds filling the ranks of the Asian fixed-income markets is Citadel Investment Group and Soros Management, but Greenwich reports there are also “smaller players from New York and London and internal hedge funds organized by some of the major global banks” – such as UBS, CIBC, Credit Suisse and Citigroup, as well as HSBC and Standard Chartered, which Greenwich says are “more local in origin.” Hedge funds are also giving the credit-derivatives market in Asia a real boost, as trading volume in the interest-rate variety has tripled from a year ago. According to Greenwich, hedge funds account for $5 billion in “flow” credit derivatives in the past 12 months, but have an even greater presence in structured credit derivatives. There, hedge funds represent nearly 30% of the $14 billion total. All this hedge fund and private bank involvement has spurred the demand for the fixed-income talent, such as credit analysts. Along with the soaring demand is equal surge in compensation, which Greenwich says has tripled in one year among buy-side fixed income professionals.