Geoff Barker, a former HSBC Holdings Plc economist, plans to start a new Asian macro hedge fund in March after lead managing an earlier pool to a 10.4 percent annualized gain since 2006.
Counterpoint Asian Macro Fund will be managed by a venture he set up with City Financial Investment Co., making him the first Asia-based manager backed by the London-headquartered company, which is led by two former executives of Invesco Ltd.’s Perpetual asset management unit, he said.
Barker is the latest hedge-fund manager in the region to join what are known as “platforms” that provide non-investment services to help them cut startup costs and attract institutional investors. Hedge-fund startups are turning to the platforms, such as the one offered by City Financial, after funds-of-funds that rely on wealthy individuals lost assets following the global financial crisis in 2008, hampering smaller hedge funds’ ability to raise capital.
“It’s better to be part of a business that we know is capable of passing due diligence of major investors,” Barker said in an interview on Nov. 14 in Hong Kong. “In the post-Global-Financial-Crisis world, scale is more important.”
Managers already overseeing $5 billion or more attracted $127.5 billion of new capital since 2009, while smaller funds experienced net outflows, according to Chicago-based data provider Hedge Fund Research Inc.
The tie-up with City Financial will allow Barker to avoid having to hire a larger team and rent greater office space in an uncertain fundraising environment, he said. City Financial, which has backed other hedge funds such as energy futures and weather derivatives trader Cumulus Asset Management LLP, also adds credibility to a new business, he added.
“The most important thing is you should have a business as well as a fund,” Barker said. “We can do it ourselves but it’s probably easier, quicker, less risky, more credible if we do it with a partner that’s already got that.”
City Financial will provide services such as accounting, information technology, legal and compliance in exchange for a share of Counterpoint’s fee revenue, Barker said. It can also help managers it backs raise money, he said.
City Financial-backed managers oversee a combined $1.3 billion of assets. It was acquired in 2006 by a partnership formed by Rob Hain, a former chief executive officer of Invesco Perpetual, and Andrew Williams, according to its website.
Among its backers is David Beatty, chairman of Temasek Holdings Pte-invested Inmet Mining Corp., owner of the second-largest copper project under construction.
Barker was the manager of the BIA Pacific Macro Fund, whose assets peaked at about $400 million in 2009 after starting in March 2006, for Hong Kong-based Ballingal Investment Advisors Ltd. The fund was co-managed by the company’s chief investment officer, Andrew Ballingal.
The BIA fund returned 43 percent in 2008, betting against equities and commodities while buying bonds, Barker said. Asian hedge-fund peers lost an average of 20 percent that year, their worst annual loss, according to an index of Singapore-based data provider Eurekahedge Pte.
The BIA fund gained 20 percent in 2011 and lost 17 percent in 2009, its worst year, he added. It returned 22 percent this year before Barker’s departure, making money from China’s liquidity squeeze in June, he said.
The Counterpoint fund, which Barker named to indicate his contrarian approach and ability to outperform in market downturns, will trade equity index futures, currencies, government bonds and commodities, Barker said.
Barker is starting his new fund as the low-interest rate, low-inflation environment, driven partly by goods made by cheap labor in China and India, is coming to an end.
“The opportunities are going to be in interest rates and currencies,” Barker said. “It’s only a matter of time and degree how much interest rates are going to go up. It also re-introduces some two-way flows into the currency markets because some countries will do it more quickly than others.”
Rising interest rates could further create swings in other risky assets such as stocks and properties, he added.
Barker moved to Japan almost 24 years ago as the Japan economist and head of research for Baring Securities in Tokyo, according to an official biography. He went on to become HSBC’s Hong Kong-based chief economist and head of research in Asia before the Ballingal stint, it said.
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