Japanese Day Traders' Hedge Fund Up 20% In Three Months

Nov 9 2011 | 11:27am ET

Day traders don't boast a useful track record when they graduate to become hedge fund managers. But a pair of former Japanese day traders are quickly building one at their new hedge fund.

Kyosuke Shirasaki and Masato Tanaka, 28-year-old friends from their university days, founded Harpstar Partners and launched their maiden hedge fund at the end of July. Since then, the fund, which debuted with ¥2 billion (US$26 million), is up 20%, Bloomberg News reports.

That return is even more impressive considered against the backdrop of overall hedge fund performance in the third quarter, especially in hard-hit Asia.

Harpstar invests exclusively in Nikkei 225 options, using futures to hedge its exposure. That strategy has paid off thanks to market volatility, up almost 50% in Japan this year. Shirasaki and Tanaka are targeting 50% annual returns.

Harpstar has already boosted its assets to ¥3.2 billion, both through performance and through fundraising. Shirasaki and Tanaka now aim to raise ¥5 billion over the next year.

"Our challenge is that we have no track record at major institutions, so we have to prove our worth to investors with our performance," Shirasaki said. "On the other hand, our experience as day traders means we trade quite frequently to capture the best investment opportunities."

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