Jonathan Xiong’s Arrowpoint Investment Partners fund is expected to start with about US$1bil. — Bloomberg
SINGAPORE: Blackstone Inc agrees to back a new Asia-focused hedge fund headed by a former executive at Millennium Management in one of the region’s biggest launches this year, according to people with knowledge of the matter.
Jonathan Xiong’s Arrowpoint Investment Partners is also in talks with other institutional investors as potential early backers, said the people, who asked not to be identified, discussing private information.
It’s expected to start with about US$1bil, the people added. Arrowpoint will have offices in Singapore and Hong Kong.
The multi-strategy fund is expected to start trading in the third quarter across equity, fixed-income and commodity markets using fundamental and computer-driven strategies, one of the people said.
Representatives for Blackstone and Arrowpoint declined to comment.
New hedge fund starts globally have dwindled as investors have gravitated towards established firms employing multiple trading strategies, betting they will churn out steadier returns in volatile markets.
An estimated 353 new hedge funds were set up globally in the first three quarters of 2023, less than a fifth of the full-year peak in 2005, according to the latest figures from Hedge Fund Research Inc.
In Asia, smaller single-strategy funds are struggling to expand assets.
After dominating the regional capital-raising scene for years, those focused on China stocks are particularly out of favour as the MSCI China Index enters its fourth straight losing year.
Xiong will be the chief investment officer and chief executive officer (CEO) of Arrowpoint. He will be joined by chief operating officer Andrew Freyre-Sanders, former head of trading analytics at the Abu Dhabi Investment Authority.
Joo Lee, chief technology officer of digital wealth platform Endowus, will take the same job at Arrowpoint.
Xiong was Asia-Pacific co-CEO of Millennium, Izzy Englander’s US$61bil giant, between 2018 and 2023.
He had been a senior portfolio manager for a global macro hedge fund at Goldman Sachs Group Inc and a money manager at Mellon Capital Management before that.
Hedge funds that trade various strategies with multiple teams of investors have been attracting money as others struggle.
Some 55 so-called pod shops have nearly tripled their assets since 2017, while the rest of the global industry posted tepid asset growth, according Goldman Sachs.
Regional hedge fund founders, including Navik Capital’s (Singapore) Ayan Sen, Torq Capital Management’s Avinash Abraham and Crescent Asset Management Asia’s Jai Rajpal, have been shutting down their firms to join global giants such as Millennium and Citadel.
Their deep pockets and fee terms have allowed them to woo the best talent and provide strong technology, risk management and other support.
Among the other regional hedge fund firms planned for this year is one led by former Goldman Sachs banker Jamie Goodman, who will manage US$500mil for Millennium in regional equity capital market trades.
Ten multi-strategy hedge fund firms have expanded aggressively in the region, nearly tripling their Hong Kong-licensed employees, according to Webb-site.com, which aggregates data from the securities regulator.
Founders are betting that multi-strategy firms based in the region will be able to offer better insights into Asia’s fragmented markets and provide more stable capital to portfolio managers versus global peers that can reduce investments in the region at a whim. — Bloomberg
