New U.S. Hedge Fund Taps Japan Pension Cash to Bet on Stocks

(Bloomberg) -- U.S. investment advisory firm GSB Capital LLC has started a hedge fund focusing on Japanese stocks, using seed money provided by a corporate pension fund in the Asian nation.

The GSB Japan Equity Long Short Fund targets mid- and large-cap Japanese shares, buying equity of companies with attractive fundamentals while shorting those with a poor outlook, a statement showed Monday. It aims to raise a maximum of $650 million, the firm said, without naming the seed-capital provider.

Pressured by rock-bottom interest rates, Japanese corporate retirement funds are becoming more eager to take risks for returns on their roughly $1 trillion of assets under management. Yet while they have raised exposure to alternative investments in recent years, it’s unusual for such pensions to offer initial capital to a hedge fund.

Geoffrey Bennett, GSB Capital’s chief executive officer and portfolio manager who has focused on Japanese markets for about three decades, will oversee the new fund from San Francisco. “Japan has long been an overlooked stock market and as result is a rich source of alpha opportunities,” he said in the release.

GSB set up the vehicle with help from Gordian Capital Singapore Pte, an asset management firm that provides infrastructure services for funds and asset managers. Gordian Capital Japan arranged the seed investment from the pension fund.

©2021 Bloomberg L.P.