Credit Suisse Asset Management has signed a deal with Singapore-based hedge fund manager Kimco International to become the sole distributor of its products in Japan and around the world.
Akira Takahashi, head of Credit Suisse’s asset management business in Japan, says the bank is aiming to double or triple Kimco’s assets under management in the near future, which sources place at a couple of hundred million dollars.
The bank actually invested an undisclosed sum in Kimco in 2008, effectively as seed money, so this latest move solidifies that strategic collaboration. It comes as Credit Suisse moves to expand its position in emerging markets in the alternative investments arena.
Kimco was founded in 2006 by veteran Japanese manager Toshikatsu Kimura, formerly of Sparx Asset Management, and employs a Japanese equity long/short, bottom-up investment strategy.
According to Takahashi, Kimco has a total of 10 staff in Japan all on the investments side, so Credit Suisse has been brought on board to carry out marketing and distribution to institutional investors.
"As of today there are very few hedge fund managers in Japanese equities," said Takahashi. "For that reason, the few managers there are tend to have built up a good track record and they can generate alpha.”
Kimco’s maiden fund – the Kimco Japan Long/Short Fund – started trading on January 1, 2007, reportedly with about $8 million. Its aim was to achieve an annual return of 15% with volatility of 10%.
The fund is up 36.6% since inception, against a negative 48.1% for the Topix, and has been positive every calendar year: +9.2% in 2007, +12.6% in 2008 and +8.6% in 2009. So far this year it is up 1.8%.
Kimco's master fund now has two feeder funds, one in US dollars and one in yen, sources say.
Takahashi notes that Japanese long-only equity investment is volatile, with pension funds reducing allocations. “But using long/short strategies they can limit losses when the market is weak. For that reason, Japanese pension funds are shifting to long/short strategy investment.”
Neil Harvey, head of Asia-Pacific and emerging markets globally for Credit Suisse’s asset management division, confirmed that the bank was focused on expanding in emerging markets in the alternative investments arena.
“As part of that, increasing our client and product service footprint in the Asia-Pacific region continues to be an important objective," he adds.
He said that the bank's relationship with Kimco "will help meet the needs of global investors looking for portfolio solutions”.
In another global hedge fund move, Credit Suisse's asset management division unveiled a deal in September to acquire a minority interest in York Capital Management, a global hedge fund manager based in New York. It paid an initial $425 million for a non-controlling interest in the management company.
Founded in 1991, York Capital Management has offices in New York, Washington DC, London and Hong Kong. At the time of the transaction it managed about $14 billion on behalf of institutions, endowments, foundations, funds of funds, wealthy individuals and their families.