00:00RETURNS. TELL US A STORY. CORRESPONDENT: INDEED, THE RETURNS HAVE BEEN DISAPPOINTING. HEDGE FUNDS ON AVERAGE MADE 0.8% LAST YEAR. THAT COMPARES TO GLOBAL RETURNS OF 3.4%, AND RETURNS AN AMERICA OF 6.5%. ASIA DISAPPOINTED LAST YEAR. FAMILIES ARE STARTING TO TURN THEIR BACKS ON HEDGE FUNDS AND INVESTING MORE IN PRIVATE ACTOR HE -- PRIVATE EQUITY. RISHAAD: WE OFTEN HAVE MICHAEL PRICE WHO LOOKS AFTER THE WEALTH ADVISORS. HE IS SEEING ALL OF THIS. THE FAMILIES ARE GENERALLY YOUNGER THAN THEIR PEERS IN EUROPE AND THE U.S. DOES THAT PLAY A ROLE? CORRESPONDENT: INDEED IT DOES. MOST OF THE MONEY IN ASIA IS FIRST OR SECOND GENERATION MONEY. MONEY IN THE FAMILIES IS OLDER IN EUROPE AND THE UNITED STATES. AS A CONSEQUENCE, THERE IS LESS OF A SEPARATION BETWEEN THE LET -- BETWEEN THE WEALTH OF THE FAMILY AND THE BUSINESS OF A FAMILY IN ASIA. THE PATRIARCH, THE OWNER OF THE FAMILY OFFICE, IS STILL MORE RETURN ORIENTED IN ASIA. HE OR SHE IS MORE AGGRESSIVE. THEY WANT HIGHER RETURNS, BETTER THAN THE UNITED STATES OR EUROPE. THE IDEA OF FAMILY OFFICES , THE MANDATE IS MUCH MORE ABOUT CAPITAL RESERVATION. IT ASIA, THEY WANT HIGHER RETURNS. THAT IS THE REASON WHY THEY ARE NOT HAPPY WITH THE RETURNS OF THE HEDGE FUND. RISHAAD: PARTICULARLY EFFECTIVE? CORRESPONDENT: IT IS THE SMALLER HEDGE FUNDS. YOU NEED ASSETS OF ABOUT 100 MILLION U.S. DOLLARS TO GET COVETED MONEY. IN ORDER TO REACH THAT SIZE, TO REACH THAT $100 MILLION, YOU NEED THE FAMILY OFFICE.

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Why Asia's Richest Families Are Dumping Hedge Funds

Asia's richest families are disappointed with mediocre hedge fund returns and are balking at high fees, prompting them to shift to private equity. With redemptions already at a four-year high, Asia’s richest people comprise an investor group regional hedge funds can ill afford to lose. Family offices representing billionaires and multi-millionaires are a key source of capital in Asia, where global pension funds and university endowments haven’t made large inroads. Managers seeking money for new hedge funds are likely to be the hardest hit. Bloomberg's Klaus Wille has more on "Bloomberg Markets." (Source: Bloomberg)