JT's hedge fund founders take new path as Harvest steps in
Managers Larry Zhang and Kurt Baker are moving on from JT Capital Management's Greater China-focused hedge fund, which is to be transferred to Harvest Alternative Investment (HAI), AsianInvestor has learned.
Zhang and Baker were the fund's co-founders, with Zhang a former adviser to China’s state pension fund, and Baker an ex-Asia prime brokerage head at Morgan Stanley.
The JT Greater China Long-Short Fund will be transferred on June 5, with HAI chief investment officer Daniel Tao taking over management of the strategy, confirms Lindsay Wright, head of HAI.
The fund was seeded by mainland mutual fund house Harvest Fund Management – the parent firm of HAI – which holds a 30% stake.
A majority of the investors have agreed to the transfer and will remain onboard, adds Wright, who declined to specify the fund's AUM.
Industry sources say the strategy, which started trading in November 2010, had fallen short of its $100 million capital-raising target and had trouble achieving returns amid last year’s turbulent market conditions.
However, Baker, who has been overseeing JT Capital’s operations, says that the performance of the fund, which has a long beta bias, was in line with investor expectations.
On a broader basis, he adds that investors were not allocating money for funds focused on China and Asia in general due to broader European-related risk concerns, and that performance had no bearing on JT Capital's fundraising.
Baker says the transfer of management is down to philosophical differences, as he and Zhang want to shift to a more quantitative approach. "We still run an offshore quantitative equity market neutral strategy in the PRC and are also in discussions with offshore investors about a new offshore fund," he stresses.
JT Capital was set up in early 2010 by Zhang and Baker, with offices in Hong Kong and Beijing. Zhang, who has been running the firm’s investments, is a former senior adviser to China’s National Social Security Fund on its global investments.
Prior to joining the NSSF, Zhang was a partner at London-based quant hedge fund manager GSA Capital and was a portfolio manager for Barclays Global Investors’ Asia-ex Japan Long/Short Fund.
Meanwhile, Baker had led Morgan Stanley’s prime brokerage in Asia until 2008. He went on to found Cranmore Capital, an alternative investment platform company, before teaming with Zhang for JT Capital.
JT Capital was the first boutique manager of HAI, a subsidiary of Harvest FM that was created to roll out a range of boutique alternative investment platforms, including hedge funds, private equity and special situations.
Other funds under HAI include private equity vehicle Harvest Seven Stars Media Fund and the Harvest QDII REITs Fund.
Harvest FM is understood to have been in talks with Northstone Peak Capital, a firm set up in 2010 by Greg Park – the former chief of Asia securitised products at Deutsche Bank – to raise a private equity-style fund.