Bermuda should look to China to attract new hedge funds to the Island, according to Bermuda International Business Association chief executive Cheryl Packwood.

Ms Packwood was speaking after the MARHedge World Wealth Summit 2006 this week, which was sponsored by BIBA and attracted almost 700 participants and delegates.

“MarHedge is the number hedge fund conference worldwide and this year I was really impressed at the quality of the presenters and exhibitors, including Goldman Sachs, JP Morgan, CityGroup, Bank of New York and the Bermuda exhibitors such as TBI,” Ms Packwood said.

The conference took an in-depth in-depth look at the changing role of global high-net-worth investors play in the hedge fund market and emerging hedge funds and the newest market entrants and strategies ranging from Eastern Europe to commodities such as oil and gas.

“One of the biggest topics at the conference regarding the development of hedge funds was that the up and coming economies — Brazil, Russia, India and China are growing exponentially.

“Based on the growth of the Chinese economy, China is expected to overtake the US economy within the next several years and this is based on the population size of the country and productivity output.

“China is a major market that we should be marketing and looking to in terms of registering hedge funds in Bermuda, as well as India and Brazil.”

Ms Packwood said BIBA intends to hold briefings with Chinese businessmen both in Bermuda and China.

She said marketing efforts should be extended to the Chinese Government and news media and with India and Brazil with local law firms, accounting firms, businesses and hedge funds.

“There is an issue of how much you should regulate hedge funds and the risk to pension funds is a concern of all countries. We market Bermuda as an intelligently regulated jurisdiction.”

Ms Packwood said one of the issues to emerge from the conference are the misconceptions and misinformation about registering hedge funds in Bermuda that continue to exist.

“Bermuda is known to be a quality or elite hedge fund market but with that comes the misconception that Bermuda is a high cost market to register hedge funds.”

“Some people think it is cheaper to register a hedge fund in the Caymans than in Bermuda.

“There is a misconception that the minimal capital required to register a hedge in Bermuda is $100,000, whereas the minimal capital required is only $1.”

The Cayman Islands Monetary Authority requires that a registered fund must have either a minimum aggregate equity interest of CI$40,000 (US$50,000) purchasable by a prospective investor or the equity interests must be listed on a stock exchange approved by the Authority.

Ms Packwood said the cost to register a hedge fund in the Cayman Islands is a lot higher than in Bermuda.

She also that know your customer requirements in Bermuda were less cumbersome, with the checks done through the Bermuda Monetary Authority (BMA).

Ms Packwood said other misconceptions continue to exist but reforms to financial services and company law mean, for example, there is no longer a requirement to have Bermuda resident directors and no prior ministerial consent is required for the formation of a mutual fund.