* Assets above $1 bln, up from $230 mln since 2010 start
* Year-to-date return at 5.8 pct, ahead of peers, benchmark
* Asia only had 29 hedge fund firms with $1 bln at Jan 2011 (Adds details, background)
By Nishant Kumar
HONG KONG, April 27 (Reuters) - Macquarie Asian Alpha Fund has quadrupled assets to more than $1 billion since the start of 2010, according to an investor letter seen by Reuters, joining a small club of hedge funds managing $1 billion or more in the region.
Assets of the market-neutral long/short Asia focused hedge fund from Macquarie Group rose to a high of $1.03 billion in April, up from $576 million at the end of December. The fund had started 2010 with about $230 million.
The fund returned 5.8 percent in the first three months of 2011, the investor letter showed. By comparison, the Eurekahedge Asia Long/Short index was up 0.3 percent, while the MSCI Asia Pacific Index was down about 1 percent.
Only 29 hedge fund firms in Asia managed more than $1 billion in January 2011, data from industry tracker HedgeFund Intelligence showed. By comparison, the United States had 216 such firms, and Britain had 65.
The milestone is keenly watched in the relatively small Asian hedge fund industry as a reflection of money managers' ability to attract institutional investors. It also indicates a revival of capital flows into the region.
The fund has been seeing investment inflows, helped by Macquarie's global marketing presence and liquidity track record during the financial crisis, when it honoured redemptions worth about $500 million in 32 days.
"Being part of Australia's largest investment bank, we have a robust institutional infrastructure and investors take comfort from this in the post-Madoff world," Nick Bird, the fund's lead portfolio manager said in an e-mail.
The $152 billion Asian hedge funds industry added $20 billion to their assets last year, backed by positive returns and accelerated flows in the second half of 2010, according to data from AsiaHedge.
The fund, co-managed by industry veteran Andrew Alexander, has given an annualised return of 11.8 percent with volatility of 4.9 percent since launch in October 2005, the letter showed.
The market-neutral strategy, aimed at profiting from both rising and falling prices with target fund beta, or market risk, to be equal to zero, has no country, sector or currency biases and applies quantitative strategies to filter out stocks.
The fund screens nearly 5,500 stocks and places bets on hundreds of them. It aims to generate returns through individual stock selection by going marginally long or short on them.
Quant fund managers follow a set of mathematical techniques to evaluate risk, pricing and timing in financial markets, unlike those following fundamental and technical analysis that largely depend on subjective calls. (Editing by Ken Wills)