Paris and Chicago-based Addax Capital Management recently launched a China-focused fund of hedge funds dubbed the Zhong Guo Fund. The fund, which means middle kingdom in Chinese, launched on Jan. 1 with €5 million and is up 8.04% through March.
The Zhong Guo Fund currently invests in nine underlying managers mainly employing long/short strategies, and will increase its portfolio to 12 funds in the near term.
The fund’s underlying managers are Western-educated Chinese nationals based in either Hong Kong or Singapore with research offices in China, according to Addax chief executive Jean-Jacques Joule. The underlying managers each handle between $20 million and $700 million in assets.
“I think we have a good story and what I tell investors is that they cannot ignore China, and the best way to play in China is through a fund of funds because I do think it is dangerous to be benchmarked,” said Joule.
“The A-shares market is an opportunity market and you have to be able to enter and leave very quickly,” he said. “The B-shares market is very specific and you have to have good knowledge, but there are some interesting things to do there.”
The new offering, which is currently marketed to French institutional investors including pension funds and insurance companies, charges fees of 2% for management and 10% for performance.
The firm is also opening an office in Singapore to further source Asian managers and operations there should commence within the next few months.
Addax spun out of Credit Agricole in 2004 and currently manages €160 million in four other funds.