By Nishant Kumar
HONG KONG Feb 22 Doric Capital Corp, one
of Hong Kong's oldest hedge fund firms founded by former Man
Group Plc executive Michael Nock, has shut its
decade-old Asia ex-Japan long/short equity fund and plans to
focus on managing its small-cap strategy.
Launched in October 2001, the flagship Doric Focus Fund
closed in January following a 28 percent loss in 2011, according
to a letter to investors seen by Reuters this week. Assets were
down to about $25 million from a peak of just over $350 million
The firm had decided to dedicate its efforts to managing the
Doric Asia Pacific Small Cap Fund, Managing Director Howard Wong
told Reuters in an e-mail.
"It was a tough decision to close down the Doric Fund given
its long and respectable track record spanning over 10 years,"
Wong said. "Nevertheless, its less-than-splendid performance in
recent years has prompted us to re-align our core competency
with our goal and thus focus on the Doric Asia Pac Fund."
The $45 million small-cap strategy was up 4.8 percent in
January and Wong said gains in February had lifted the fund's
return to double digits. The fund was down 14.5 percent last
year, according to data collected by Thomson Reuters Lipper.
The Eurekahedge Asia long/short equities index fell 10.2
percent last year, as Europe's debt crisis, a sluggish U.S.
recovery and events such as Japan's nuclear disaster combined to
create a tough trading environment for hedge funds.
That has led to investors pulling out from funds with
closures surging past launches for the first time since 2008,
putting pressure on the industry which remains $52 billion
behind its peak assets of $176 billion.
Doric's core team, including Wong and Rajesh Ranganathan,
who have won seven awards in the past decade in the equity
long/short space, will continue to manage the small-cap
Wong said several small and mid-cap companies, especially in
China and India, remained inexpensive even after the recent
market recovery and while growth expectations had moderated,
business prospects and financial condition remained attractive.
"We believe the Doric Asia Pac Fund would provide the best
equity alternative product for investors in Asia and our total
dedication on one single product should ensure its continued
success," Wong added.
Firms that launch many funds tend to underperform other
firms by between 3 to 5 percent per year after adjusting for
risk, according to a study by Melvyn Teo, a professor of finance
at the Singapore Management University.
Doric was founded by Nock in 1999. Hamon Investment Group,
in which Bank of New York Mellon Corp. has a minority
stake, bought a 46 percent stake in the firm in 2009.
Senior managing executives Howard Wong, Rajesh Ranganathan
and Jeff Liu formed an equal partnership with Hamon then, while
Nock retained a stake.