Bloomberg News

T&D Said to Close Japanese Hedge Fund on High Trading Costs

October 14, 2011

(Updates with investor’s comments in fourth paragraph.)

Oct. 14 (Bloomberg) -- T&D Asset Management Co., with about $27 billion in assets, closed its Japan-focused hedge fund because of higher-than-expected trading costs and returned money to clients, according to four people familiar with the matter.

The T&D Japanese Equity Long & Short Fund shut at the end of September after starting in June 2010 with about 700 million yen ($9.1 million) from T&D Asset, the fund management arm of Japanese insurer T&D Holdings Inc., the people said, asking not to be identified because the information is private. Hisakazu Amano, who heads the investment department at T&D Asset, declined to comment.

About 72 hedge funds in Asia have closed down this year, according to Singapore-based Eurekahedge Pte., as economic concerns in the U.S. and Europe’s sovereign debt crisis made it difficult for some to navigate volatile markets, and investors remained reluctant to take bets. Global Trading Strategies, a Sydney-based hedge fund founded by three former Goldman Sachs JBWere Pty traders, finished trading July 31.

“For hedge funds in Asia to get sufficient attention from investors, you have to outperform significantly in various measures against their more established rivals,” said Rory Kennedy, chief operating officer at Rogers Investment Advisors K.K. “It’s been like this for several years and it’s only going to get worse in this kind of a market volatility it understandably makes many investors nervous.”

Bow and Arrow

The T&D Asset’s fund was run by Susumu Tominaga and Kazuko Yuzaki, who were hired by T&D Asset in June 2009 from Yunzei Investment Research, a Tokyo-based hedge-fund advisory firm. The fund, whose managers nicknamed it “Meigen,” which means to exorcise demons with a bow and arrow in Japanese, was T&D Asset’s first that bet on gains and declines in Japanese stocks.

Prior to Yunzei, Tominaga was at Schroeder Investments Management Ltd. where he headed a team that oversaw $4 billion in assets. Yuzaki formerly worked as the head of Japan’s small to mid-cap stocks sales team at Nomura Securities Co. Both Tominaga and Yuzaki, who left T&D Asset, declined to comment.

Shares of T&D Holdings dropped 2.4 percent to 764 yen as of 2:05 p.m. in Tokyo, extending declines in the morning session.

Costs related to executing stock trades led to a negative performance of the fund, the people said. The Eurekahedge Japan Hedge Fund Index is down 0.9 percent through September, compared with the 4 percent drop by the global benchmark, based on data compiled by Eurekahedge.

Increased Scrutiny

The collapse of Lehman Brothers Holdings Inc. in 2008 that led to a global financial crisis increased scrutiny of the industry. Assets managed by Japan-focused hedge funds dropped 57 percent to $16.6 billion from a peak of $39 billion in 2006, according to Singapore-based Eurekahedge.

Artradis Fund Management Pte, whose hedge funds made $2.7 billion in profits for investors as markets see-sawed in 2007 and 2008, closed down after it lost money from wagers on price swings in the last two years, according to Singapore-based co- founder Stephen Diggle.

Global Trading returned investors their money after its strategy of betting on global economic trends faltered. The fund, which peaked at $1.2 billion in 2008 after starting in 2005, finished trading July 31 after more than a year of negative returns, Chief Operating Officer Murray Chatfield said Oct. 12.

Highbridge Capital Management LLC, the hedge-fund firm owned by JPMorgan Chase & Co., is liquidating its $1.4 billion Asia Opportunities Fund after manager Carl Huttenlocher resigned, two people with knowledge of the matter said in March.

--Editors: Linus Chua, Andreea Papuc

To contact the reporters on this story: Tomoko Yamazaki in Tokyo at tyamazaki@bloomberg.net; Komaki Ito in Tokyo at kito@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net


Ebola Rising
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus