China’s second largest asset manager, E Fund, has closed its emerging markets hedge fund less than two years after launch, apparently due to low performance and AUM.
E Fund Global Emerging Markets, an offshore long/short equity strategy managed from the firm’s Hong Kong unit, lost -2.8% in the 12 months since its August 2011 launch, according to fund database figures.
It is understood to have been running just under $6 million near the end of last year.
The hedge fund was recently closed with capital returned to investors, a spokesperson from E Fund (HK) confirmed to AsianInvestor.
Meanwhile, a long-only emerging markets vehicle, launched by E Fund in May 2011, is also understood to have been closed at around the same time.
The two EM strategies were co-managed by Charles Wang and Fei Peng. Wang, who had served as E Fund (HK) chief executive, left the firm in late 2012 to join Bosera in Shenzhen as chief investment officer for the ETF and quantitative investments business. It is understood that Peng has remained at E Fund.
The vehicles, for which E Fund had initially hoped to raise up to a combined $500 million, were part of E Fund’s plans to expand its reach and product range globally. International institutions, high-net-worth individuals and Chinese companies with assets in Hong Kong were among investors targeted for capital.
E Fund, which recently overtook Harvest to become China’s second-largest fund house, was prescient in diversifying into emerging markets strategies.
Capital inflows into EM strategies were strong last year, with the Eurekahedge Emerging Markets Hedge Fund Index gaining 11% in 2012.
However, one industry executive notes that it remains challenging for Chinese mutual fund houses to raise money for hedge funds on the global stage, as their brands have limited investor recognition abroad.
Other observers note that managers from mainland mutual fund firms often lack the experience and track record of more seasoned alternatives veterans.
The Hong Kong-based offshore asset management unit of Chinese bank CICC closed its Asia-focused long/short equity fund last year after remaining at a small AUM, despite having a capacity of $500 million.