Japan investment firm GCI Asset Management, which launched a commodities hedge fund in Singapore earlier this year, hopes to establish and seed at least two more funds from promising Japanese managers next year, a company executive said on Wednesday.

GCI, which was founded in Tokyo in 2000, currently manages a total of about 31.5 billion yen ($508.8 million). Besides fund management, it also provides investment advisory services.

 

“I do not have a specific target but would like to launch at least a couple of new funds in 2011,” GCI senior fund manager Shinichiro Nagai told Reuters in an interview about new Singapore-based funds.

 

GCI hopes to have US$200 million ($262.6 million) invested in its Japan Alpha series of hedge funds helmed by Japanese managers with interesting investment strategies by the end of next year, he added.

 

Its Singapore office launched the Orix Commodities Fund, the first fund in its Japan Alpha series, in partnership with Japanese financial group Orix <8591.T> earlier this year. The fund currently has about US$40 million in seed capital.

 

Nagai said the Orix fund, which uses a computer trading programme developed by Orix Investment Corp chief trader Atsuhito Mori, started operations on June 10 and had returned 7.85% as of Oct 8.

 

The programme’s annualised return since Orix began using it for proprietary trading in June 1995 was in excess of 10%, he added.

 

GCI has begun active marketing of the Orix fund now that it has a track record, and hopes to grow the fund size to around US$300 million over the next three years. Nagai described the Orix fund as “very unique” since about 25% of assets are invested in products that are mostly traded in Asia such as rubber and Asian stock index futures, differentiating it from other commodity trading adviser, or CTA, funds.

 

Asked why GCI is managing the fund from Singapore instead of Tokyo, he said the city-state “has certain advantages in flexibility in regulation on hedge fund operations.”

 

The Singapore operations will also benefit from a lower tax rate.