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Big-name Asia hedge funds raise billions, startups struggle
[HONG KONG] Established Asian hedge funds have attracted the lion's share of new money this year, while startups have been hamstrung by global travel curbs that have made it impossible for face-to-face meetings with European and US asset allocators.
Well-known firms including Tribeca Investment Partners, Pleiad Investment Advisors, Dymon Asia Capital (Singapore) and Sylebra Capital have drawn more than US$3 billion of new money among them this year. That contrasts with the net US$3.1 billion that flowed out of regional funds in the first eight months of 2020, according to Eurekahedge. Meantime, the median raising for new Asia funds this year is just US$20 million.
"Asset raising has been possible this year, but it has been materially more challenging," said Matthew Whitehead, chief operating officer (COO) of Hong Kong-based Sylebra.
Among funds that have attracted new money: Tribeca saw assets swell by about US$1 billion between March and September, half of which was new money, with the rest coming from performance gains, Asia chief executive officer (CEO) Ben Cleary said. Investors who had enjoyed a decade of big gains in the US during its bull run are now looking for other options to hedge their risks as a weakening US dollar and economy put returns under pressure, he said.
APS Asset Management added about US$200 million from existing North American and European institutional investors, chief investment officer Kok Hoi Wong said. China's relatively quick containment of the outbreak and rapid economic rebound has boosted its attractiveness for investors, Mr Wong said.
Sylebra raised about US$400 million for a new technology-focused fund.
With a shortage of local institutional allocators to hedge funds, Asian managers rely on US and Europe sovereign wealth funds, university endowments, charitable foundations and pensions for stickier money. That makes them particularly vulnerable to the Covid-19 travel restrictions.
About 73 per cent of investors in a recent Credit Suisse Group survey anticipated no travel for the rest of the year to research and conduct due diligence on hedge funds. Just 30 per cent of them are able to invest without on-site visits. An additional 42 per cent could allocate money without face-to-face meetings only if certain conditions are met, such as familiarity with the investment team.
The new money tends to concentrate in two groups of managers: those who have a proven track record of performance, and the so-called platforms whose multitude of investment teams enable them to generate stable returns.
Dymon, which is returning money from its flagship macro fund to focus on a multi-strategy fund, has gathered US$1.6 billion for the new fund and expects a further US$1 billion in coming months, the firm said in September.
New offerings also give investors an opportunity to gain access to, or top up money with, star managers who have restricted inflows into older funds. Some firms have started, or plan to set up, funds that only place bullish bets as short-selling opportunities in the region are relatively limited. Those aren't captured in the Eurekahedge data.
These include: Pleiad has raised almost US$500 million for an Asia long-only fund, mostly new money that came in this year, said a person with knowledge of the matter.
Wang Tongshu's WT Asset Management gathered about US$200 million in two month for a new long-only fund that focuses on Greater China stocks, with a sovereign wealth fund as anchor investor, said CEO Vivian Chang.
Anatole raised about US$100 million for a new long-only fund in two months, said a person with knowledge of the matter. Its older US$2 billion flagship fund returned more than 60 per cent in the first eight months while a second fund gained more than 80 per cent.
New and existing investors committed US$50 million to a new long-only Asia fund started by Zaaba Capital, according to COO Michael Becker.
More are in the pipeline. CloudAlpha Capital Management, whose fund returned 135 per cent in the first eight months of the year, is starting a new fund that takes more-concentrated long and short bets on global tech stocks.
"In this current phase, investors will be making fewer investments, initial investment sizes will be smaller and will build slowly," Mr Whitehead said.