Millennium Alumnus Iwami Sees $150 Million for Macro Hedge Fund

Naoki Iwami, a former managing director at Millennium Capital Management in Tokyo, expects to raise about $150 million by the end of March for his hedge fund that invests in bonds and currencies.

The Whiz Rock Global Macro Investment Fund, with about $50 million, has returned about 1 percent since inception in August, said Iwami, executive vice president at Tokyo-based Whiz Partners Inc. Insurers, pensions and regional banks in Japan have invested in the fund and fund-of-hedge funds at home and abroad are now showing interest, he said. His performance outpaces a 0.58 percent gain by the Eurekahedge Pte index that tracks similar funds.

The number of Japanese startup hedge funds has declined even as Prime Minister Shinzo Abe’s policies led to renewed interest in the capital markets of the world’s third-largest economy. Eighteen Japan-focused hedge funds have started so far in 2013, the fewest starts in any one year since 2001, according to Singapore-based data provider Eurekahedge.

“We didn’t expect that money would come easy given how we’re a boutique firm,” Iwami, 56, said in a telephone interview from Tokyo on Nov. 15. “We’ve been asked to continue delivering performance to win their allocation.”

Macro funds typically trade stocks, bonds, currencies and commodities based on managers’ analysis of fundamental, economic and political factors. They are still rare in Asia, making up only 5.6 percent of hedge funds in the third quarter, compared with 23 percent globally, according to Chicago-based Hedge Fund Research Inc.

Average Size

The average size of Japan-focused hedge funds this year is $51 million, compared with $115 million for all funds focused on the country including those with long-only strategies, according to Eurekahedge.

Iwami’s fund has struggled to achieve higher returns amid a lack of clear direction in the market, he said, adding that he would look for catalysts including when the U.S. Federal Reserve will start considering tapering stimulus.

The Federal Open Market Committee will probably dial down its bond buying to $70 billion at a March 18-19 meeting, according to the median of 32 economist estimates in a Bloomberg News survey Nov. 8. Their forecast followed a U.S. government report that employers last month increased payrolls by 204,000 workers, more than expected.

“Now is the time to persevere given the lack of big trends in the market,” said Iwami, who forecasts the tapering to be in the first three months of 2014.

Before Millennium, Israel Englander’s $19 billion U.S. hedge-fund firm, Iwami was the head of investment business at JPMorgan Chase & Co. in Tokyo and chief investment officer of bond investments at Nomura Asset Management Co., he said.

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