Hedge Fund Securities, run by a former Nikko Securities Co. banker, aims to raise 6 billion yen ($78 million) by March 2013 from Japanese individual investors by offering hedge funds run by Epic Partners Investments Co.
The company raised 673 million yen in the first month since starting a fund of hedge funds in November that invests in three Japanese equity strategies run by Tokyo-based Epic, said President Sadaya Mano. It will have capacity of about 10 billion yen, which the firm aims to raise in about two years, he said.
Japanese retail investors, with about $14 trillion in financial assets, are faced with low bond yields, near-zero interest rates and more than two decades of slumping stock prices. Hedge Fund Securities wants to give them access to strategies currently offered only to institutional investors.
“Retail investors aren’t getting access to hedge-fund strategies that can actually provide decent returns, so we want to fill the gap,” Mano, 35, said in an interview in Tokyo.
Among the funds that are included in the offering is the Wisdom of Japan Fund, which returned 1.4 percent in 2011, according to Tadashi Mukai, who runs the fund. It employs a market-neutral strategy, which seeks to profit from both rising and falling prices by matching long and short positions in different stocks to boost returns.
Japanese hedge funds lost 1.3 percent in 2011, a year that global hedge funds suffered their worst annual decline since 2008, according to data compiled by Eurekahedge Pte. The Eurekahedge Hedge Fund Index dropped 4.2 percent last year, as global stock markets slumped amid fears that the European sovereign-debt crisis would spread, and managers struggled with increased market volatility.