Hedge fund opts for 'platform' benefits

Counterpoint Asian fund will be backed by UK's City Financial Investment to cut costs

PUBLISHED : Thursday, 21 November, 2013, 2:47am
UPDATED : Friday, 22 November, 2013, 5:12pm

Geoff Barker, a former HSBC economist, plans to start a new Asian macro hedge fund in March after lead-managing an earlier pool to a 10.4 per cent annualised gain since 2006.

Counterpoint Asian Macro Fund would be managed by a venture he set up with City Financial Investment, making him the first Asian-based manager backed by the London-headquartered company, which was led by two former executives of Invesco's Perpetual asset management unit, he said.

Barker is the latest hedge fund manager in the region to join what are known as "platforms" that provide non-investment services to help them cut start-up costs and attract institutional investors. Hedge fund start-ups are turning to the platforms, such as the one offered by City Financial, after funds-of-funds that rely on rich individuals lost assets following the global financial crisis in 2008, hampering smaller hedge funds' ability to raise capital.

"It's better to be part of a business that we know is capable of passing due diligence of major investors," Barker said. "In the post-global financial crisis world, scale is more important."

Managers already overseeing US$5 billion or more have attracted US$127.5 billion of new capital since 2009, while smaller funds experienced net outflows, according to Chicago-based data provider Hedge Fund Research.

The tie-up with City Financial would allow Barker to avoid having to hire a larger team and rent greater office space in an uncertain fundraising environment, he said.

City Financial, which has backed other hedge funds such as energy futures trader Cumulus Asset Management, also added credibility to a new business, he added.

"The most important thing is you should have a business as well as a fund," Barker said. "We can do it ourselves but it's probably easier, quicker, less risky, more credible if we do it with a partner that's already got that."

City Financial would provide services such as accounting, information technology, legal and compliance in exchange for a share of Counterpoint's fee revenue, Barker said.

It could also help managers it backed raise money, he said.

City Financial-backed man-agers oversee a combined US$1.3 billion of assets. It was acquired in 2006 by a partnership formed by Rob Hain, a former chief executive of Invesco Perpetual, and Andrew Williams.