Asia Hedge Fund PCA Investments, Backed by China Sovereign Wealth Fund, Has Shut Down

Asia Hedge Fund PCA Investments Has Shut Down

China Sovereign-Wealth Fund Was Hedge Fund’s Only Major Outside Investor

MIA LAMAR

Updated Jan. 26, 2014 10:59 a.m. ET

A hedge fund with financial backing almost entirely from China’s giant sovereign-wealth fund closed down last week less than three years after it was launched, according to people familiar with the matter.

PCA Investments was formed in 2011 and attracted notice for the involvement of China Investment Corp., the country’s $575 billion sovereign-wealth fund, which is tasked with investing part of China’s vast foreign-exchange reserves. PCA had operations in both Hong Kong and Beijing.

The involvement of one of the world’s largest sovereign-wealth funds with a hedge fund startup with no record of performance was unusual. CIC is better known for investing in established funds.

People familiar with the fund said CIC was PCA’s only major outside investor, adding even more opaqueness to the privately run firm, which was estimated by these people to be managing more than $500 million.

PCA was founded by Hang Hu and former Merrill Lynch executive Wing Lau, who left the firm last year.

The reason for the fund’s closure wasn’t known. A call to PCA’s Hong Kong office wasn’t returned and CIC representatives didn’t respond to request for comment late Sunday.

The sovereign-wealth fund is going through management changes, with a new chairman, Ding Xuedong, appointed last year amid China’s leadership change and its president, Gao Xiqing, set to be succeeded by Executive Vice President Li Keping.

A website for PCA describes it as a “multiasset and multistrategy” investment firm running an Asiawide equities strategy, a global fixed-income strategy and a global macro strategy, the latter a catchall phrase for funds that try to predict and profit from global economic trends.

The closure goes against the current interest in Asian hedge funds, many of which are catching the eye of investors with strong performances. Average returns for funds last year investing in Asia excluding Japan beat peers in the U.S. and Europe for the second year running, rising 13% versus an 8% average return for the industry, according to data from industry tracker Eurekahedge.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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