York Capital’s Asia Spinoff to Form $3.5 Billion Hedge Fund Firm

(Bloomberg) -- York Capital Management’s Asia team, on course for a 13-year winning streak in Japan, is about to become one of 2021’s largest new hedge fund firms, said people with knowledge of the matter.

Led by Masahiko Yamaguchi, MY.Alpha Management HK Advisors Ltd. will have more than $3.5 billion of assets under management when it spins out of York in early December, the people said, asking not to be identified because the information is private. That figure would include what was known as the York Asian Opportunities Fund, along with a smaller pool using mostly internal capital to make more concentrated Japan investments, they added.

The spinoff is among several to come after billionaire Jamie Dinan’s York unveiled plans last year to exit most of the hedge fund business. Investors globally are seeking out hedge funds that have proven their ability to weather downturns as markets are caught in the crosswinds of geopolitical tensions, fears of rising interest rates and regulatory tightening in China. 

Jonathan Gasthalter, a New York-based spokesman for York, declined to comment.

Asia-focused hedge funds have attracted $3.3 billion of fresh capital in a year when the MSCI Asia-Pacific index slipped about 3%, while the S&P 500 and European stock indexes continued their rallies. Hedge funds in Asia are typically smaller than those in the U.S. and Europe, operating in less efficient markets that are further removed from the global industry’s key investor bases. 

York set up a Hong Kong office in 2007. Yamaguchi joined the firm late that year, and took over leadership of the regional unit in April 2014. Under him, its assets grew more than five times to $2.7 billion in November, when York announced it was pulling away from most of its hedge fund business and spinning out the team. 

With Yamaguchi at the helm, the Asia fund generated an annualized return of 12.6% in an “unrestricted” share class designed for non-U.S. investors through the end of June, according to a presentation sent to investors. Eurekahedge’s Asian hedge fund index averaged an 7.9% gain over the same period and the MSCI Asia Pacific Index rose 8.9%.

The Japan strategy hasn’t had a losing year since 2008, the document showed. The Asia fund had a mid-single digit return so far this year, while the Japan pool reported mid-20s gains before fees, said the people. Japan and India were the main money makers for the Asia fund this year, they added.

The average Asia-focused hedge fund with at least $250 million of assets returned 4.4% in the first eight months, according to data from Eurekahedge, whose Japan hedge fund index gained a preliminary 7.4%. Eurekahedge’s Asia hedge fund gauge this year saw the two largest monthly losses since the March 2020 global market rout.

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