Fortress Investment Group LLC, the buyout and hedge-fund firm run by Daniel Mudd, started an Asia-focused macro hedge fund that it aims to grow to $500 million, three people with knowledge of the plan said.
The Fortress Asia Macro Fund has started trading with the firm’s own money and that of a few clients, the people said, asking not to be identified because the information is private. The fund is set to attract more money starting in April, when investors make their allocations, the people said. Gordon Runte, a New York-based spokesman, declined to comment.
Adam Levinson, co-chief investment officer of global macro funds, moved to Singapore from New York in January to lead the firm’s Asia-specific macro-trading activities from the newly opened office. Fortress joins global managers such as New York-based Soros Fund Management LLC, founded by billionaire George Soros, in setting up shop in Asia as the region’s economic growth outpaces the rest of the world.
“Asia is at the top of our list of priorities and high on every investor’s list,” Mudd, Fortress’s chief executive officer, said in an e-mail to Bloomberg News. “The Asia region has long been a key focus of our liquid markets business. We are already trading about 40 percent of our Fortress Macro Fund out of Singapore, and have begun to ramp up additional Asia-specific strategies.”
New York-based Fortress, which managed $44.6 billion as of Dec. 31, said in December it appointed Thomas Kang, former CEO of Seoul Securities Co., a South Korean investment firm that was majority owned by Soros Fund Management, as president of its business in Asia. Fortress plans to have a team of 20 to 25 people in Singapore, one of the people said.
Levinson, who joined Fortress in 2002, serves on the firm’s operating and management committees. He was previously a fund manager at Paul Tudor Jones’s Tudor Investment Corp. and a proprietary trader at Goldman Sachs Group Inc., spending nine years in the bank’s Hong Kong, Tokyo and London offices managing portfolios focused on Group-of-10 and emerging-market risk, according to Fortress.
Mudd, the former chief of Fannie Mae, said in October that Fortress is also considering making more private-equity investments in Asia.
Macro funds are “very bullish” on Asia, said Christopher Fawcett, senior partner of Fauchier Partners, a fund of hedge funds firm with about $8 billion of assets.
“Their commitment to Asia is stronger now than it was previously because of the relative importance of the market today,” London-based Fawcett said. “There’s a big interest in Asia from the macro funds because of the currency markets here and the amount of reserves that are held by the central banks.”
Investors favored macro hedge funds in the fourth quarter, allocating $6.6 billion of new capital to the strategy as they “focused on the dynamics of inflation protection,” Chicago-based Hedge Fund Research Inc. said in a report in January. Macro funds seek to profit from broad economic trends by trading currencies, bonds, stocks and commodities.
China and Japan combined account for about 42 percent of global reserves, according to data compiled by Bloomberg.
China may spur outflows of capital from emerging markets unless it arrests inflation by tightening monetary policy, Levinson said in January. China’s policy stance is too loose and officials should be more aggressive in curbing inflation now to avoid more “draconian” measures later, he said in Singapore.
The Fortress Macro Fund Ltd. gained 0.12 percent in the first two months of the year, according to a filing with the Securities and Exchange Commission. The fund gained 10.7 percent in 2010, according to the firm. Macro funds, on average, gained 8.6 percent last year, according to HFR.