Boat in Victoria Harbor in Hong Kong with city skyline in the day
SINGAPORE: Hedge fund founders in Asia are jumping ship to global giants from Citadel to Millennium Management as the struggles of capital raising and pressure to make higher returns curb the attractiveness for some managers’ solo endeavours.
Torq Capital Management chief investment officer Avinash Abraham is closing his firm to rejoin Citadel as a portfolio manager, while macro manager Ayan Sen returned to Millennium this year, marking the end of his more than five-year stint running his own Navik Capital (Singapore), Bloomberg reported.
Smaller hedge fund firms are facing a difficult capital-raising environment and an increasingly costly war for talent.
While there have always been isolated cases and it’s too early to know how many more will follow, high interest rates have driven up expected returns and are forecast to tilt more Asia-based hedge fund entrepreneurs in favour of embracing the bigger global so called pod firms, or platforms.
“It’s just hard to get investors on board, harder now than it has been for a long time, because so many investors just pile the money into platforms,” said John Mullally, Hong Kong managing director of recruiting firm Robert Walters.
While some industry followers were surprised when former Balyasny Asset Management Asia head Abraham announced he was shutting up shop in his December newsletter, others before him have made similar moves.
Panich Prompat, now a portfolio manager at Dymon Asia Capital, joined Millennium in 2021 after running his firm for three years.
Citadel in 2020 hired back Nick Taylor, who set up his own event-driven hedge fund in Hong Kong after an earlier stint with Citadel.
In the three quarters ending June 2023, hedge fund closures in the region outstripped new starts by at least two to one, according to Preqin Ltd estimates.
There were still more funds shutting than opening in the third quarter of 2023, even as the gap narrowed.
Abraham began his investment career as an analyst at Och-Ziff Capital Management, honed his skills at Citadel between 2005 and 2009 before his seven-year Balyasny stint, according to his LinkedIn profile and regulatory records.
He founded Torq in Hong Kong in 2016 and won the backing of Blue Pool Capital, which invested billions of dollars for wealthy clients including Alibaba Group Holding Ltd co-founders Jack Ma and Joseph Tsai. Torq declined to comment further.
From a modest beginning of US$160mil, Torq expanded assets to a peak of US$1.5bil in the first quarter of 2022.
But the firm struggled to recover after a 3.7% loss that year, despite topping the 16.5% slump in a Eurekahedge index of Asia-Pacific stock hedge funds and the fund’s small gain in 2023.
Investors once favoured hedge funds of a moderate size that specialise in a single strategy and charge lower fees.
Fledgling funds often produce superior returns, due to their ability to trade in and out of positions unnoticed, as well as explore profitable opportunities too small for larger rivals. — Bloomberg
