HedgeCo.Net — China International Capital Corp. is preparing to launch a fund of hedge funds targeting about $500 million from international investors, Bloomberg reported. The vehicle, run by the bank’s capital advisory solutions team, could launch as early as November and will invest mainly in Greater China and Asia-Pacific equity strategies.
The fund is aimed at university endowments and family offices in Hong Kong, Europe, the U.S. and the Middle East, and CICC itself is expected to invest. Roughly half of the capital is expected to go to fundamental equity and quantitative managers operating in Greater China, with the remainder spread across multistrategy and macro managers and other Asia-Pacific markets, including Japan, to reduce concentration.
The team has researched global hedge funds since 2016 and has allocated proprietary capital to between 15 and 20 managers at a time since 2020, according to marketing materials cited in the report. It screens more than 500 funds a year and conducts detailed assessments on about 10%. The proprietary hedge fund portfolio generated an annualized return of 12.7% from July 2023 through August 2026, with no losing calendar year.
The launch tests international appetite for Chinese managers at a volatile moment. The CSI 500 Index is down about 11% this year, while the broader MSCI Asia-Pacific Index has gained more than 11%. Interest in Chinese quantitative strategies has grown, however: Meridian & Saturn Capital won a $1 billion mandate from a Middle Eastern sovereign wealth fund earlier this year, and Qube Research & Technologies expanded its China long-only strategy more than tenfold in the year to January.
For allocators without local research teams, a bank-sponsored fund of funds offers access to a manager universe that is otherwise hard to diligence from abroad. The trade-off is an added layer of fees and the concentration risk of a single country’s policy and market cycle, which CICC is seeking to offset with a broader Asia-Pacific mandate.