Hong Kong-based Richland to shut hedge funds in surprise move
HONG KONG (Reuters) - Hong Kong-based Richland Capital Management Ltd is shutting down its hedge fund operation, Chief Investment Officer Alex Au told Reuters on Tuesday, a major blow to an industry struggling to raise assets and turn a profit for investors in Asia.
The decision to close down is unexpected as Richland has outperformed peers in the $133 billion Asian hedge fund industry since it was launched in 2006.
Richland, one of the best-known in the region, manages assets worth $100 million between two hedge funds and advises clients on assets worth an additional $150 million, according to its letter to investors.
"The funds have liquidation date today," said Au, confirming an earlier Reuters report. He did not give a reason.
Au, a former HSBC Holdings Plc (HSBA.L) trader founded the fund in 2006 with Eva Lo, a former Credit Suisse Group AG (CSGN.VX) executive.
Richland made money for its Asia Absolute Return Fund each year since its launch, including a 5.3 percent gain in 2008, when the global financial crisis unfolded.
Lo is not involved in managing portfolios but both partners have an equal say in running the firm.
Typically, hedge funds shut down in response to poor performance or clients withdrawing large amounts of money, problems Richland did not suffer.
The Richland Asia Absolute Return Fund managed about $75 million in February this year compared to $10 million when it was launched in December 2006, the investor newsletter showed.
The fund gained 14.1 percent in 2012 and was up about 6 percent in the first quarter of 2013, according to fund performance data seen by Reuters, outperforming a 10 percent gain in the benchmark Eurekahedge Asia index last year and 5.8 percent in the March quarter.
A second fund, the Richland Emerging Opportunities Fund, returned 13.1 percent last year and was up about 18 percent in the first quarter of 2013.
So far, 23 hedge funds have shut down in Asia, compared with 18 launches, according to data from Eurekahedge. Last year, 169 hedge funds closed in Asia, exceeding 139 launches.