the long/short edo fund and the long-only japan fund are to be managed by Huw Llewellyn and Rod Birkett
Thames River Capital has launched two offshore Japanese funds ' a hedge fund and a traditional long-only vehicle.
The long/short Edo fund, launched on 29 November, is Cayman-approved and Dublin-listed with yen, dollar and euro share classes. Dealing is monthly and minimum investment in the fund is $100,000.
The Japan Fund is a long-only vehicle with both Ucits and Financial Services Authority recognition. It is regulated by the Central Bank of Ireland and Dublin listed.
Dealing is daily and the fund is available in euro and dollar share classes. Both will be run on an absolute returns basis.
Huw Llewellyn and Rod Birkett will manage the funds. A third manager may join the team in the new year.
They had hoped to raise at least $25m for the long/short product, but conceded it would be harder to raise capital the long-only vehicle because many invest-ors are negative on the market.
The investment approach for both funds is a mix of top-down and bottom-up investment. The managers look for companies that undergoing restructuring, but are still good value for long positions and old-style uncompetitive Japanese firms failing to change for short positions.
Over the long term they will invest with a mid-cap bias although in the short term this could vary depending on the market environment.
'We do not want to get caught in small-cap liquidity trap ' we want to retain flexibility to move as the picture changes,' said Birkett.
There will be an overlap of around 90% in the short positions of the funds.
To investors who have no view on where they think Japan is heading, Birkett and Llewellyn will recommend investment in the long/short product.
They believe the long-only vehicle will make money, despite a difficult market, due to their stock-picking ability, but it will be more difficult.
'If the market does decline over the next year or two, then yes it will be difficult to make absolute returns, but when the market goes up it will happen suddenly,' said Birkett.
They plan to close both funds at $250m, but the amount could be less, depending on market conditions.
The Edo fund will charge an annual management fee of 1.5% with a 20% performance fee. The Japan Fund will charge an annual management fee of 1.75% with a performance fee of 10% of relative return with an absolute hurdle.
Llewellyn has more than 25 years' investment experience, with 23 years specialising in Asia and Japan. He joined Thames River Capital in September from Samba Capital Management International where he was responsible for equity investments in Japan and Asia from 1989 to 2002. He managed the Samba Lux Japan Equity Fund from January 1995 to May 2002. From 1984 to 1989 he specialised in broking Japanese equities at SG Warburg Securities in London and Tokyo, where he was deputy general manager. From 1984 to 1985 he was director and fund manager responsible for Japanese and Asia equities at the English Association and from 1979 to 1984 he managed the Lazard Far Eastern Fund at Lazard Brothers & Co.
Birkett has 20 years' investment experience, including 13 years specialising in Japan. In September he joined Thames River Capital from JP Morgan Fleming Asset Management, where he was managing director of the firm's investment trust business from January 1998 to July 2002. From May 1991 to December 1997 he was senior fund manager with Fleming Asset Management's Japan desk with specific responsibility for the Save and Prosper Japan Growth Fund and the Fleming Japanese Investment Trust.
He was previously assistant director of Japanese equity sales at SG Warburg Securities from 1988 to 1991 and worked at Vickers da Costa from 1983 to 1988.
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