Kelvin Woo and Joe Zhang are leaving GLG Partners Inc., the London-based hedge fund bought by Man Group Plc in 2010, to set up their own Asia-focused macro hedge fund, said four people with knowledge of the matter.
The two, both emerging-markets managers based in Hong Kong, may start the fund in July, said the people who asked not to be identified because the information is private. Angela Fung, a Hong Kong-based spokeswoman for Man, confirmed Zhang’s departure. Woo declined to comment when reached by phone.
Woo and Zhang join managers such as former Perry Capital LLC Asia head Alp Ercil and Carl Huttenlocher, who had led Highbridge Capital Management LLC’s regional business, in leaving big global companies to start their own hedge funds.
Fifty-eight Asian hedge funds started by new and existing managers last year raised a combined $4.43 billion, the highest amount since the industry peaked in 2007, according to a February statement by London-based AsiaHedge. Huttenlocher’s Myriad Asset Management Ltd. and former Goldman Sachs Group Inc. proprietary trader Morgan Sze’s Azentus Capital Management Ltd. were among the year’s biggest startups in the region.
“Demand for high-quality hedge funds in Asia has been on the rise, demonstrated by some high-profile launches in the past couple of years,” said Max Gottschalk, Hong Kong-based co-founder of Gottex Fund Management Holdings Ltd., which allocates $7.6 billion to hedge funds. “Managers with strong pedigrees have been able to raise some good assets at launch, but few have delivered on expectation.”
Woo and Zhang will be joined by Tony Gravanis, a former Morgan Stanley colleague, the people said. The three plan to name their Hong Kong-based company HighIsland Capital Partners, after a part of the city’s scenic Sai Kung area, said the people. Macro hedge funds seek to profit from broad economic trends by trading credit, currency, commodity to equity instruments.
Woo was an asset manager on GLG’s emerging markets team, according to an official biography in a first-quarter presentation for the Man GLG Emerging Markets Income Fund.
Morgan Stanley Alumni
He started working as a consultant for GLG in May 2009 and joined the hedge fund in its Hong Kong office a year later, involved in foreign-exchange, fixed-income and equities investments in Asia. He had been a managing director with Morgan Stanley before GLG, having built the bank’s emerging markets business in Hong Kong, according to the presentation.
Zhang joined GLG in November 2010, the document showed. He was an executive director at Morgan Stanley where he had initiated trading of Asia rate option and exotic products in foreign exchange and credit derivatives.
The two worked under Karim Abdel-Motaal and Bart Turtelboom, former global co-heads of Morgan Stanley’s emerging markets business, who joined GLG in September 2008 to replace its top hedge-fund manager Greg Coffey, according to the document.
GLG’s Emerging Markets Income Portfolio returned an annualized 16 percent from November 2007 through December 2011, outperforming the 6.3 percent retreat of the emerging markets stocks index and 8.2 percent gain in the emerging markets bonds index, according to the document.
It lost 1.7 percent last year, the only annual loss since 2007, according to the document. Almost 16 percent of its gross exposure, the total value of bets on and against securities, was in Asia and Australia at the end of December.
GLG managed $26.2 billion at the end of December, according to the document.
Azentus’s assets hit as much as $2 billion after its April 2011 inception. Myriad’s assets swell to $900 million by March 1, after investment started on Dec. 1, two people with knowledge of the matter said in March.
Investors have favored macro hedge funds less linked to stock markets since the global financial crisis, with such managers receiving $7.8 billion of net new capital globally in the first quarter, half of the industry total, according to Chicago-based data provider Hedge Fund Research Inc. Macro funds drew $27.9 billion of new capital in 2011.
Asia macro funds are still one of the more uncommon strategies making up 5 percent of the macro hedge fund universe, while Asia’s gross domestic product accounts for 30 percent of global GDP, said Alexander Mearns, chief executive officer of Singapore-based data provider Eurekahedge Pte.
“Due to the un-crowded space, raising assets for those funds that perform well, whilst still challenging, should be easier than other strategies,” Mearns said.
Dymon Asia Capital (Singapore) Pte expanded assets to $2.85 billion by February, having started trading in August 2008 with $113 million of initial capital from Paul Tudor Jones’s Tudor Investment Corp. The Singapore-based company’s main macro fund returned more than 20 percent last year, making it the best performing Asia hedge fund with assets of more than $1 billion, according to data compiled by Bloomberg.
A group of UBS AG traders are leaving the bank to form Sydney-based macro hedge fund MST Capital, Gerard Satur, who will lead the new company, said in February.
“Having a strong pedigree is not necessarily enough these days to guarantee success,” Mearns said, adding high-profile hedge fund startups set up by former employees by banks and other financial institutions “have quietly disappeared due to lack of performance and capital.”