London-based City Financial are tapping into Asia’s growth story by launching the Cayman Island-domiciled City Financial Asian Absolute Growth Fund. Investment advisory firm, Clontarf Capital, will manage the fund of hedge funds, with Clontarf founder, Aoifinn Devitt acting as portfolio manager. Other key service providers include Dublin-based Capita (administration), BNY Mellon (custodian) and Maples and Calder (legal). Speaking to Hedgeweek, City Financial Chief Executive Andrew Williams (pictured) said the fund, designed to meet institutional investor needs, was launched with just over USD50 million, but would not become a billion dollar behemoth: “The marketing tail will not be wagging the investment dog.” “The fund’s sweet spot will be around USD300-500 million,” adds Devitt.
Ten managers have been selected for the portfolio, 9 of which are based in Hong Kong and Singapore. “China is the only place with a single-country focus,” says Devitt. “We use a basket of three on-the-ground managers there as the fund’s success will come from using a diversified, local talent pool.” CFAAGF will mainly focus on equity L/S strategies, although event driven and equity-biased multi-strategy will also be used. “Currently we’re 75 per cent long/short,” explains Devitt. Fifty per cent is the minimum although we will reduce that if we think the markets are going to fall.” Williams believes that the fund, admittedly launched at a time when Asian indexes like the Nikkei 225 have slumped, presents a solution to two problems facing institutional investors – the inflation/deflation conundrum and market access. “Most pension funds believe they’ve got the deflation-side of things covered but it’s the inflationary pressures that need to be managed. The answer right now isn’t the US or Europe but Asia,” comments Williams. Also, with pension funds looking towards Asia but unable to dedicate time selecting the right investment managers, Williams believes “Absolute return funds like CFAAGF give institutional investors access to the Asian equity growth story whilst reducing exposure to volatility.” “I’m excited by the secular growth story in Asia and confident the Asian hedge fund universe will continue to mature and present a range of compelling investment opportunities,” concludes Devitt.