Sun, Jun 26, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Asia Pacific Intelligence

FCA seeds Japanese -focused hedge fund

Thursday, February 07, 2013

Patric de Gentile Williams

Continuing with the new focus on hedge funds in Japan, news came at the end of January that FRM Capital Advisors (FCA), the seeding division of FRM, Man Group plc's fund of hedge fund division, had invested in Arena Capital Management, a Japan focused hedge fund, run by ex-Citadel and Highbridge manager, Toby Bartlett.

In an interview with Asia Pacific Intelligence, Patric de Gentile Williams, head of seeding at FRM explained that they had been open minded generally about strategies in which they would next make an investment, but that Japan had recently increasingly come to the forefront of their investment thoughts.

"There has been a sense over the last few years that globally investors were reducing their exposure to Japanese long short as liquidity eroded over the last couple of decades and the market was reasonably moribund" de Gentile Williams says.

"But we did notice some investors starting to ask questions about it maybe a year ago so that exodus was coming to an end." Three factors portentously collided to push FCA into its investment with Arena.

"One, there is a fantastic opportunity at Arena, secondly there was some sense that this outflow was coming to its end and a few people were tempted to look into the space, and thirdly was the fact that the yen has fallen, then the Nikkei was up so the turnover in the equity market has suddenly gone up which has drawn people's attention to that space. We were most of the way towards making our decision to invest in Arena before the market turned, but it didn't hurt."

Arena's Bartlett is a Japanese speaking Australian, who spent three years living in Japan and worked for Fidelity, then Citadel and then Highbridge. "We liked a number of things about him" de Gentile Williams says. "He is a charismatic, enthusiastic, driven character and quite compelling as an individual. He has also been focusing on the same sector, of Japanese domestic securities, for 10 years now so he has good relationships in that sector. In an area where most have been withdrawing resources, he has 350 to 400 stocks that he knows very well. That set of relationships and long experience give him a good backdrop against which to run money. He has developed a distinctive style and strong skill set in the way he trades and portfolio construction which allows him to get clear expressions of the ideas he wants while neutralising risks."

Arena launched mid-2012 and launched the Japanese long short equity strategy fund in September. De Gentile Williams describes the fund as market neutral with pure alpha returns. FCA is starting its investment with $25m and is the first institutional investor into the fund. "For us it's a relatively small investment which is not a reflection of any lack of conviction on our part more that it's a niche opportunity. At the moment total capacity is probably around $500m." This may increase as the Japanese stockmarket liquidity improves.

Since September, the fund has seen a small positive return of just over 2% but according to the pro forma track record Bartlett has consistently achieved high single digit returns with a Sharpe ratio of over one.

For FCA, this deal is the first of three with another one coming out in each of the next two quarters.

 
This article was published in Opalesque's Asia Pacific Intelligence our monthly research update on alternative investments in the Asia-Pacific region.
Asia Pacific Intelligence
Asia Pacific Intelligence
Asia Pacific Intelligence
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Opalesque Roundup: Hedge funds shrink as liquidations outpace new launches in Q1: hedge fund news, week 27[more]

    In the week ending 17 May, 2016, HFR said hedge fund liquidations declined narrowly to begin 2016 after rising sharply to conclude 2015, as investors positioned f

  2. Europe - Hedge funds keep powder dry over big Brexit bets, Hedge funds sense profit in Europe shock waves after Brexit vote, Soros warns Brexit may cause pound plunge worse than Black Wednesday, After Brexit: What will happen if Britain votes to leave the UK?[more]

    Hedge funds keep powder dry over big Brexit bets From FT.com: Hedge funds are shying away from big bets on Brexit, with many unwilling to risk further losses having already suffered a painful first half of the year. With the outcome of a UK vote on the country’s membership of the Europea

  3. News Briefs - ’Flash Boys’ get green light to launch stock exchange, Pimco says ‘storm is brewing’ in U.S. commercial real estate, Bankers get ready to rumble at Hedge Fund Fight Night, AIMA Australia celebrates 15th anniversary[more]

    ’Flash Boys’ get green light to launch stock exchange In an investing environment ruled by fast, the newest U.S. public stock exchange is banking on slow. Well, slower. IEX Group, which won Securities and Exchange Commission approval on Friday to go head-to-head with the New York Stock E

  4. Blackstone buys minority stake in New York-based credit hedge fund Marathon[more]

    Benedicte Gravrand, Opalesque Geneva: Blackstone Strategic Capital Holdings Fund, a vehicle managed by Blackstone Alternative Asset Management (BAAM), has acquired a passive, minority interest in Marathon Asset Management, for an undisclosed sum. Based in New York,

  5. Visium hedge fund manager Sanjay Valvani found dead[more]

    Benedicte Gravrand, Opalesque London: A hedge fund manager connected with an insider trading case has apparently committed suicide. Sanjay Valvani, 44, a hedge fund manager at New York-based Visium Asset Management, was found dead in an apparent suicide on 21 June in his Brooklyn residence,