GLG Partners is readying an Asia long/short equity strategy that will be led by David Mercurio, formerly of Singapore's Government Investment Corporation (GIC).
The creation of an Asia equity team and long/short equity hedge fund is part of the growth and diversification strategy of GLG's parent entity, Man Group.
Man's largely European investor base has been seeking greater exposure to Asia, while its flagship trend-following fund, AHL, has received a mixed reception among investors in the region, say industry veterans.
Mercurio, who joined GLG in September as head of Asia equity, will co-manage the Hong Kong-based team alongside Ben Freischmidt, who serves as risk specialist. Freischmidt joined GLG in March from LionRock Capital, a Singapore-based long/short equity hedge fund, where he served as chief operating officer.
Other members of the team include David Walsh, previously the Asia-Pacific ex-Japan portfolio manager at hedge fund Optimal Fund Management, and two new hires. Nick Vidale joins from brokerage CLSA in Hong Kong, and Sahil Khanna moves from hedge fund Geosphere Capital.
Walsh will manage industrials, with Vidale taking charge of financials and Khanna the consumer and TMT sectors. They will be supported by London-based Carl Esprey, who runs GLG’s global materials and mining book.
Mercurio, who spent more than a decade managing global equity portfolios for Singapore sovereign fund GIC, is GLG’s first Asia-based investment specialist focused on equities, particularly China.
Man Group declined to comment on its plans for GLG’s upcoming Asian long/short fund, with a spokeswoman citing regulatory and compliance issues. The strategy would widen the range of Man’s long/short equity and Asia-focused products – areas it had sought to expand on through its acquisition of GLG in 2010.
Man financial statements show that about 20% of its funds under management originate from Asia – in particular Australia, Hong Kong, Japan, Singapore and, in more recent years, South Korea and Taiwan.
According to industry executives, the take-up in Asia of retail versions of Man’s flagship trend-following fund AHL – which uses a computer-generated stock-picking strategy – has been mixed.
While a retail roll-out in Japan last year received an enthusiastic response, launches in Hong Kong and Singapore are said to have met with a less keen reception. One practitioner suggests Man’s retail distribution agreements – in particular the fee commissions – may be a contributing factor.
The performance of AHL, which lost 6.4% in 2011, has also been a factor, say market participants. AHL accounts for nearly one-third of Man’s $59 billion in AUM.
Man’s intention to diversify its strategy mix led to reported merger talks in early 2010 with long/short equity managers SAC Group and Millennium Partners. By mid-year it announced a deal to buy GLG, whose flagship European long/short fund now manages about $1.7 billion. It was Man’s best-performing fund last year, returning 7%.
GLG European long/short fund is co-managed by Pierre Lagrange and Simon Savage out of London. Lagrange took on the title of Man Asia chairman in September, highlighting the firm's aspirations to transplant its success in Europe to the region.
He notes that "while the decision-making centre for this team will be in Asia, they will draw significantly from [GLG's] resources globally”.