Hedge funds are seeking opportunities in Japan after the recent cut backs in corporate debt has improved the chances of companies increasing dividends and buying back shares.
There are about 220 Japan-focused hedge funds overseeing a total of $35 billion assets, up from 100 funds managing $6 billion of investments in 2002, according to Eurekahedge, a Singapore-based research company.
Ed Rogers, who ran Deutsche Bank AG’s Japan hedge fund brokerage unit until May, is raising $500 million to give U.S. money managers access to some of his former clients in the world’s second-largest economy.
In an ivterview with Bloomberg press, he said, “It’s a great time for this product since Japan is finally emerging from a 14-year economic slump.” Rogers set up Rogers Investment Advisors this year in Tokyo and is advising Wolver Hill Asset Management Ltd., a New York-based company, to raise $500 million within a year, mostly from U.S. investors. Rogers also said Wolver Hill also plans to start an Asia-focused fund of funds that may raise another $500 million by February, he said.
Wolver Hill Japan Multi-strategy Fund will be the first fund of hedge funds located in Japan that’s open to investors in the U.S., Rogers said. The Wolver Hill fund will invest in 10 to 20 local hedge funds.
The fund will put half of its assets into equities, including short positions in which investors sell borrowed stock in the anticipation they can buy it back at a lower price. The rest will be committed to strategies that profit from price differences of related corporate securities, or so-called arbitrage funds.
Hedge funds in Japan have faced more difficult conditions this year. The Eurekahedge Japan Hedge Fund Index, which tracks 123 funds, fell 4.18 percent in the eight months through August, preliminary data show. The Eurekahedge Asian Hedge Fund Index is up 5.35 percent. The Nikkei 225 Stock Average, which gained 41.5 percent in 2005, has slipped 1.5 percent this year.
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