Hong Kong and UAE emerging as winners in bid to lure hedge funds

As we reported in our State of the Hedge Fund Industry 2025 publication, the US remains by far the largest market for hedge funds, accounting for well over half of all assets in 2023, according to Statista. That, as we explain in the report, is because the US hedge fund industry has been around longer than those in other regions and has access to a strong institutional investor base, favourable regulatory frameworks, and access to diverse financial instruments. The increasing demand for alternative investments has further strengthened US leadership in the hedge fund sector, according to Global Market Insights (GMI). It adds that the North American hedge fund market accounted for 40% of revenue share in 2024^.1

UAE’s zero-tax appeal

However, other hedge fund centres are now growing rapidly, particularly in Asia, as the global centre of economic gravity shifts away from the US and Europe. Dubai and Abu Dhabi are growing fast, with Dubai even announcing in March 2025 that it is opening a building, known as the DIFC Hedge Funds Centre, dedicated to hedge fund startups. As of March 2025, the Dubai International Financial Centre (DIFC) hosted 75 hedge funds, many of which manage over $1 billion in assets. They include notable names like Andurand Capital Management and Point72 Asset Management.²

At the end of July, the hedge fund Tyrus Capital announced it was shutting down its operations in London and relocating to Abu Dhabi. According to Bloomberg, Tyrus joins ‘a flood of investment firms setting up in Abu Dhabi and Dubai’ to take advantage of factors such as favourable trading time zones and a growing pool of talent. Dubai and Abu Dhabi are now home to some of the world’s biggest hedge funds, ranging from Brevan Howard Asset Management and Millennium Management to Balyasny Asset Management, adds Bloomberg.³

Richard Fenton, Head of Prime Brokerage Sales in the UAE, confirms that “the UAE is becoming an attractive destination for hedge funds, migration of existing vehicles and more recently, start-ups. This is driven by several factors: tax free and regulatory advantages, access to HNWI and sovereign wealth funds, and strategic geographical location for trading markets.”

The United Arab Emirates (UAE) has plenty of capital to invest in the newly arriving hedge funds – sovereign wealth funds and wealthy families have around $3 trillion in assets. Staff at many of the hedge funds have been pushing their employers to move to the UAE to exploit the highly favourable tax regime, with zero personal income tax. Moreover, while capital gains tax stands at zero in Dubai and Abu Dhabi, it has been hiked to 24% in London, which is seeing the biggest exodus of hedge fund talent to the UAE.

“DIFC & ADGM forward thinking and business friendly initiatives in partnership with IG’s cross asset class trading technology and balance sheet makes counterparty selection flexible when looking at Prime for early stage and more established managers”
Richard Fenton, Head of Prime Brokerage Sales in the UAE.

Singapore and Hong Kong fight for dominance

Further to the East, Singapore and Hong Kong are battling to become the Asian centre for hedge funds (and financial institutions more generally). Both cities are gateways to huge and increasingly wealthy regions (Singapore for ASEAN, Hong Kong for Mainland China). Both benefit from excellent infrastructure, a strong regulatory background and very low taxes.

Singapore might have been thought to have an edge, given the political unrest seen in Hong Kong and Sino–US trade tensions. However, Hong Kong continues to attract new hedge funds. In the three years to June 2024, the number of hedge funds, private equity offices and family offices moving to Hong Kong rose by 24%. The trend of hedge funds moving to Hong Kong has continued in 2025 despite the Sino–US tariff war. That could reflect the impact of several initiatives undertaken by Hong Kong to attract wealth managers, including tax incentives and an enhanced investment migration scheme. In November 2024, for example, the territory announced it would waive tax on investment gains from cryptocurrencies and other alternative assets for hedge funds, private equity funds and certain family offices.⁴

In January 2025, as an example of Hong Kong’s reviving appeal as a financial centre, three global hedge funds announced plans to move to the territory. They are: the US multi-strategy firm Hudson Bay Capital Management LP, the UK credit shop Sona Asset Management, and the New York-based Centiva Capital LP.⁵

Earlier, in November 2024, the number of individuals licensed by Hong Kong’s Securities and Futures Commission (SFC) reached its highest level since the system began in 2003.

Hong Kong sees record levels of finance professionals