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Credit Suisse Wins Exclusive Agreement With Hedge Fund KIMCO

Date: Tuesday, November 9, 2010
Author: Tomoko Yamazaki, Bloomberg

Credit Suisse Group AG, Switzerland’s second-largest bank, said it reached an agreement with KIMCO International Pte to be the exclusive distributor of the Singapore-based hedge-fund manager’s Japan-focused funds.

Credit Suisse plans to roll out its global distribution of KIMCO’s products later this month through its asset-management unit, the Zurich-based firm said in a statement. The tie-up will allow KIMCO, which employs a so-called long-short equity strategy investing in Japanese equities, to focus on investments and portfolio management.

KIMCO forged the alliance to help drive investor demand after Japan-focused hedge funds became the worst performers amid concerns that the economic recovery is faltering. The Eurekahedge Japan Hedge Fund Index returned 0.9 percent through October, the worst of six regional indexes, compared with a 7.3 percent gain by Eurekahedge’s global hedge-fund index and an 11 percent drop by Japan’s stock benchmark Topix index.

“A long period of market underperformance has reduced the amount of capital and the number of both researchers and investment managers engaged in Japanese equities, which we believe, creates more opportunities for the remaining players to obtain alpha in the Japanese equity market,” Toshikatsu Kimura, founder and chief investment officer of KIMCO said in the statement. Alpha refers to additional returns an investment portfolio earns above a certain benchmark.

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

Managers of so-called long-short funds bet on rising and falling stock prices. In a short sale, a trader borrows stock and sells it in the hope it can be bought back later at a cheaper price.

To contact the reporter on this story: Tomoko Yamazaki in Tokyo at tyamazaki@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net.