RAB Asia Spin-Off To Launch Market-Neutral Stock Fund

Feb 22 2011 | 10:13am ET

Northwest Investment Management, the former Asian hedge fund arm of RAB Capital, plans to raise US$250 million for a new market-neutral hedge fund.

The Hong Kong-based firm, which spun off from RAB in 2009, will launch its Equity Alpha Fund in April, Bloomberg News reports. The firm's principals will seed the new vehicle, which they hope will raise the quarter-billion dollars within a year.

The fund features new hire Nial Gooding, who joined the firm last year from UBS to boost its equity capabilities.

Mark Smith, the firm's head of business development, said the new fund aims to tap a growing demand for uncorrelated stock funds in Asia. The new vehicle will not go short, will not use more than 50% leverage, and aims to have no more than 15 positions apiece in its major markets of China, Hong Kong, India, Japan and Taiwan.

"Per market, people have 30, 40, 50 positions," CEO George Philips told Bloomberg. "Once you start going above that number, you do become market."

Philips said the Equity Alpha fund will target 20% annual returns.

Northwest currently manages US$750 million across three hedge funds. The firm's assets grew by some 37% last year, thanks primarily to new allocations from institutional investors.

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