Carl Huttenlocher’s Myriad Asset Management has set up a hedge fund focusing on opportunities arising from Japan’s efforts to end deflation, said people with knowledge of the matter.
Myriad, which oversees more than $4 billion of assets, started its second fund on March 1 with internal money and has approached potential investors, said one of the people who asked not to be identified as the information is private.
The Myriad Japan Reflation Fund will invest in assets including stocks, equity indexes, interest rates and currency whose valuations are expected to be affected by the country’s exit from deflation, the person added. Its equity investment will be focused on financial companies. Sam Guinness, a Hong Kong-based investor relations officer at Myriad, declined to comment through e-mail.
Japanese Prime Minister Shinzo Abe and the Bank of Japan began unprecedented stimulus two years ago and introduced reforms to pull the world’s third-largest economy out of deflation that took hold in the late 1990s. The yen has weakened more than 20 percent since then, boosting profits of exporters and helping drive the Topix index up more than 40 percent.
Huttenlocher is a former Highbridge Capital Management Asia head. Myriad, based in Hong Kong, already has Japan reflation-related investments in the flagship Myriad Opportunities Master Fund, which opened to investors in December 2011. The new fund can make bigger, more concentrated investments in the theme, the person added.
The Myriad Opportunities Master Fund, which started with about $340 million, has not lost money on an annual basis.
The Japan reflation fund will have a limited life expectancy of two to four years, when Myriad anticipates the investment theme or at least a significant portion of it will be played out, said the person.
Myriad started the fund amid mixed signs of Abe’s success. Five-year Japanese government bond yields fell to zero for the first time on record in January. Abe’s efforts to revive the economy by cutting borrowing costs have only just started to revive the pace of lending, while deposits at Japanese banks swelled to records every year since 2007.
Cheaper oil and a weak recovery drove the central bank’s main consumer price gauge to zero in February, frustrating the Bank of Japan’s effort to meet its 2 percent inflation target. Price gains could pick up strongly in the second half of the fiscal year ending March 2016, central bank Governor Haruhiko Kuroda said in March.
Myriad has hired Ben Happ for its marketing and investor relations team, said one of the people. Happ was a Boston- and Hong Kong-based prime broker at Credit Suisse Group AG and former head of business development at hedge fund Abax Global Capital (Hong Kong). He declined to comment on the new role through e-mail.