Superfund Aims to Raise $100 Million for New Japan Retail Hedge Fund

Superfund, which oversees $1.2 billion in managed futures funds, aims to raise $100 million within a year for a new hedge fund targeting Japanese retail investors.

The Superfund Blue Japan, which invests in global equities using a computer-driven model, began its public offering today, said Johann Peter Santer, president of Superfund Securities Japan Co. in Tokyo. The Cayman Island-based fund will employ a market-neutral strategy that seeks to profit regardless of market direction.

Based on theoretical trades, the fund would have had annualized returns of 11.52 percent since August 2007 through June this year. It starts after the MSCI World Index’s worst quarter since the last three months of 2008 amid concerns Europe’s sovereign debt crisis and a slowdown in China will derail the global recovery.

“The fund has done extremely well when equity markets were falling,” said Santer, 33, in an interview in Tokyo. “Clients can get the benefit of equities while avoiding the downside.”

The fund will invest in the most liquid stocks worldwide and sell index futures to hedge against price declines, he said. It is Japan’s first publicly offered equity market-neutral fund to be based on an automated trading system, which is most often used by managed futures funds, according to Superfund.

The firm aims to tap into an estimated 1,400 trillion yen in financial assets owned by Japan’s individual investors in a nation where interest rates remain near zero and the benchmark Nikkei 225 Stock Average has shrunk to less than a third of its value since its record high in 1989.

Market-Neutral

“Japanese investors had to look for other opportunities much earlier than other global countries” given the declines in their home market, said Santer. “Japan has a high passion and sophistication for systematic trading.”

The Superfund Blue Japan follows two other managed futures funds -- which use computer programs to search for price signals in futures markets ranging from equities and bonds to oil and gold -- offered to Japanese retail investors by Superfund Securities Japan, he said.

Market-neutral funds seek to profit from both rising and falling prices by matching long and short positions in different stocks and indexes to boost returns. The Superfund Blue Japan will only take short positions in futures indexes, while its long bets will be in single securities, Santer said.

The fund will pick investments out of 2,500 stocks globally, based on daily trading volumes and trading commissions, Santer said. The fund’s average number of days for holding a single stock is about 4, he said.

Gold Class

The fund will be offered in both a yen class and a gold class, allowing investors to track the performance of the gold price, according to Santer. The fund in gold class has had an annual return of 40 percent based on simulated trades since January 2008 through June this year.

Superfund aims to start a similar fund in the U.S. and Austria, Santer said, declining to give the timing.

Superfund, founded in Vienna in 1995, has been better known for its managed futures funds, which invest in 150 markets worldwide. The firm’s flagship fund, Superfund Q-AG, has returned an average 13.6 percent annually since its inception 14 years ago through June, according to the firm.

Hedge funds are mostly private pools of capital whose managers participate substantially in the profits from their speculation on whether the price of assets will rise or fall.

To contact the reporters on this story: Tomoko Yamazaki in Tokyo at tyamazaki@bloomberg.net; Komaki Ito in Tokyo at kito@bloomberg.net