Swiss-based manager Hedge Vision Capital has announced that following the winding down of its 15-month-old Japan Fund after heavy losses in January and substantial investor redemptions, th
Swiss-based manager Hedge Vision Capital has announced that following the winding down of its 15-month-old Japan Fund after heavy losses in January and substantial investor redemptions, the firm is looking to attract fresh seed investors for a new attempt to capitalise on opportunities in the Japanese market.
The Hedge Vision Japan Fund was launched in November 2006, pursuing a long/short, directional and trading-oriented Japan-only strategy. The fund enjoyed a good year in 2007 with a gain of 6.57 per cent for the US dollar class, ranking 13th out of 77 funds in AsiaHedge’s long-short Japan sector and outperforming the Japan Long/Short Index by 9 per cent. According to the manager, this was achieved with the targeted volatility of 10 per cent.
However, the strategy suffered heavily in January with the US dollar class losing 14.13 per cent. Hedge Vision says the poor performance stemmed from the fund’s directional strategy being positioned on the wrong side, with reasonable gross exposure, at a time when markets were extremely turbulent.
After the fund’s largest investor decided to redeem their investment, Hedge Vision says, other investors were also forced to redeem because they were not allowed to become the largest investor in the fund. The investment manager stopped trading at the end of January and the fund began winding down at the end of March.
However, Altendorf-based Hedge Vision is researching opportunities to relaunch the strategy with new seed investors, believing that a 15-month track record and a well-established operational structure could mitigate the operational risk associated with a start-up fund.
The investment manager is confident about the prospects for Japan, noting that Japan funds have recovered in the first quarter of the year, unfortunately too late for the Hedge Vision Japan Fund. The firm believes that while ‘not the flavour of the day, Japan will be back, and that could even come by the end of the year.
‘With the whole world underweight in Japan and funds throwing in the towel, those who can stay in business may have really big opportunities when it turns. In this particular market environment, [we] see the strategy as a call on the Japanese market, protecting money on a year-to-year basis, and ready to seize the opportunities when they arise – as they did in 2007.’
