Asia-focused hedge funds suffered substantially last year, with long/short the worst performing strategy, as AsianInvestor reported yesterday, and indeed many of the recent closures seem to have come in that section of the industry.
More than a third (46) of the 127 liquidations of Asia funds came in the third quarter of 2011, according to Singapore-based research house Eurekahedge. And they included not only small, early-stage funds, but also relatively large, well-established players, say sources.
Taiwan-based Clairvoyance Capital Advisors is winding down its Asia Master Fund, a long/short strategy with a focus on technology stocks and managed by Joe Tsai. At one point the Singapore-incorporated firm ran some $800 million in assets in the fund, which launched in September 2004. The firm could not be contacted by press time.
Another long/short player in Hong Kong, the Pangu Opportunity Fund, has been liquidated. The Greater China-focused strategy, run by Anthony Tse and Simon Hwang, launched in February 2010, having been seeded with at least $12 million by Penjing Asset Management. Hwang had formerly worked at Ludgate Hill Investment Management and Anthony Tse was previously an analyst at Gandhara Capital.
These come on the heels of other Asia long/short closures, including that of Seoul-based CoreVest Partners and UK-based Wessex Asset Management’s portfolio, which includes two Asia-focused strategies.
Paik Kyung-Hwa’s CoreVest launched in late 1998 and was viewed as one of the region’s pioneering hedge funds. Ironically, it's shuttering comes as South Korea has relaxed its rules on hedge funds to allow more to set up and sparking more interest in the sector among domestic investors.
However, Korean institutional investors will tend to look – at least initially – at big hedge funds based in the UK or US rather than home-grown firms, notes Alexander Mearns, chief executive at Eurekahedge. That tendency will not have helped CoreVest, which could not be contacted for comment.
Wessex has closed both its Asia-Pacific long/short equity and Asian special situations strategies. The fund had once managed more than $270 million, but that had fallen to $11 million, it reportedly told investors in a letter. Founded in 1999, the firm has also closed three other strategies, which focus on gold (launched in October 2007), natural resources (May 2004) and water (January 2007).
Wessex did not respond to request for comment by press time.
Ultimately, raising capital is supremely tough across the board. “People aren’t getting money in like they used to; it’s taking a lot longer,” says one Hong Kong-based consultant to hedge funds. “Some people who had said they would have 'x' million raised by year-end – they aren’t just a little off, they’re way off.”
Still, many of the bigger, more strongly performing firms have held up relatively well in terms of retaining capital, says one capital introductions executive at a big international bank in Hong Kong. Within his client base, those firms with more than $500 million in AUM were only down around 3% for 2011, while those with under $100 million were down more than 5%.
“Yes there have been closures, but it’s been nothing like 2008, where there were massive redemptions from investors in all locations and from all types of funds across the board, often regardless of performance,” he says. “It’s just that many of the funds seeing withdrawals have just not been particularly impressive.”