KGR Launches Greater China Hedge Fund of Funds

Aug 14 2007 | 11:58am ET

U.K.- and Hong Kong-based fund of funds shop KGR Capital has launched a Greater China-focused fund with US$8 million.

The firm launched the KGR Capital China Absolute Return fund, a Caymans-based fund of funds, because of the growth of China-focused hedge funds, according to Mark White, a director in the firm’s London office. “We’ve seen a substantial increase in terms of quantity and quality of China-focused hedge funds and our feeling is that the Chinese authorities really were likely to continue to liberalize capital markets in an attempt to address a potential bubble developing in the A-share market,” said White.

White also defends his firm’s seemingly questionable fund launch in a ballooning A-share market environment, noting, “It was time for a hedged approach in this situation.” So far, so good for KGR’s latest offering: the fund returned 2% in June and 5.6% in July.

The Capital China fund currently invests in seven managers. White said there are about 85 single-manager funds operating in the region and the firm’s familiarity with the managers helps it vet “the good ones from the not so good.” “Everybody that we talk to is very surprised when we tell them that the Greater China hedge fund universe now has approximately the same number of funds as the Japan-only universe.”

The new vehicle offers two fee structures: an institutional share class charging 1% for management and 10% for performance, and an intermediary class charging 1.5% and 10%, both with a $1 million minimum investment requirement.

KGR was founded in 2002 by John Knox, Nicholas George and Christopher Rampton, former Jardine Fleming executives. The firm is managing a total of some $350 million in four other Asia-focused funds of funds.

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