New Japanese Hedge Fund Features Short-Selling Quiver

May 20 2010 | 11:30am ET

A new Japanese hedge fund aims to take advantage of weakness in the country’s markets with a shorting-heavy strategy.

T&D Asset Management, an arm of Japanese insurer T&D Holdings, will launch its Japanese Equity Long & Short Fund on June 1, Bloomberg News reports. The strategy behind it turned in a 13.4% return in simulated trading last year—a figure T&D aims to repeat, with a targeted annual return of between 12% and 20%, with a short-heavy portfolio.

The new fund, nicknamed “Meigen,” will invest in the most liquid Japanese stocks, with between 50 and 70 positions in its short book and 40 to 60 long bets. No short will total more than 3% of its assets, and no long can make up more than 5%.

“For us, shorting is not a hedge, but more of a tool to create alpha, and we see plenty of opportunities now,” co-portfolio manager Kazuko Yuzaki told Bloomberg.

Meigen—which means to exorcise demons with a bow and arrow in Japanese—has been seeded with about ¥700 million by T&D Asset. Yuzaki and co- manager Susumu Tominaga hope to raise about ¥10 billion over the next two years; the fund has a capacity of ¥50 billion.

Both Yuzaki and Tominaga joined T&D Asset last year from Tokyo-based hedge fund advisory Yunzei Investment Research.

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