FCA seeds third Asia hedge fund with $25 million
FRM Capital Advisors (FCA) has seeded its third Asian strategy, making an initial $25 million investment in Arena Capital – a Japan-focused long/short equity fund set up by former Highbridge Capital portfolio manager Toby Bartlett.
Arena started trading in September last year and is expected to reach an AUM of about $50 million at the end of Q1, Patric de Gentile-Williams, head of seeding at FRM, tells AsianInvestor.
Arena trades in Japanese domestic demand sector stocks, which Bartlett has been following for the last nine years, says Gentile-Williams. “There are relatively few people with that level of experience and interaction with those companies.”
Bartlett, who serves as Arena’s chief investment officer, runs the strategy out of Hong Kong. He had managed the pan-Asia equity portfolio for Highbridge out of Hong Kong from 2009-11 and previously served as a Japan portfolio manager for Citadel Investment Group and Fidelity Investments.
Bartlett claims a track record averaging 9% annually over the past five years, in an Arena fund document seen by AsianInvestor. Arena is understood to have made a single-digit gain in its first few months of trading.
Arena is the most recent fund to be set up by a former team member of Highbridge’s Hong Kong operation.
Carl Huttenlocher, who served as senior portfolio manager for the Highbridge Asia Opportunities Fund, heads Myriad, which started trading in 2011. The multi-strategy fund, run out of Hong Kong, has about $1.4 billion in AUM.
Arena does not have a set capacity, with Gentile-Williams noting that it is largely dependent on the liquidity of the Japanese equity markets.
“If you look at where liquidity has been over the past couple of years, then it’s somewhere in the order of [about] $500 million, he says. “If there’s a meaningful uptick in liquidity, then that number can be much larger.”
London-based FCA is the seeding business of fund-of-hedge-fund FRM. Arena marks the first Asian strategy to be seeded by the firm since FRM was acquired by Man Group in May last year.
FCA had previously seeded Asia-focused long/short equity strategies by Isometric Capital in 2009 and Sensato Asia Pacific in 2010.
Isometric, which was run out of Hong Kong, closed in 2011 after FCA reportedly redeemed its capital, while US-based Sensato has scaled up to just over $1 billion on the back of strong performance.
FCA is looking to see more Asia-focused funds, but is not seeking out any specific strategies, says Gentile-Williams.
Of the more than 100 funds that are launched in Asia every year, only a handful is backed by seeders, according to an industry veteran.