Former Millennium and Morgan Stanley executive raises $3 billion for new Asia-focused hedge fund

Kurt Baker, a former executive at Millennium Management and Morgan Stanley's Asia prime brokerage, is currently raising nearly $3 billion for a new hedge fund firm, 30th Century Partners. The Hong Kong-based firm, focusing on the Asian market, is set to start trading in June 2024 with an initial team of eight to ten investment groups.

30th Century Partners aims to focus its investments primarily in Asia, targeting markets such as India, China, South Korea, Taiwan, Hong Kong, and Japan. The firm also plans occasional ventures into Southeast Asia and Australia, while some of its investment strategies like macro trading will have a global reach.

This move comes as diversified strategies in hedge funds gain popularity in a region mainly populated by smaller competitors focusing on narrower scopes. The recent underperformance of China- and technology-focused hedge funds highlights the benefits of diversification amid rising macroeconomic, geopolitical, and regulatory uncertainties.

Asian multi-strategy hedge funds have only experienced one annual loss—a 3% dip in 2018—over the last decade. In contrast, regional peers focusing solely on stock trades encountered losses in three of those years. China-centric hedge funds fared worse with losses in four years, including two double-digit declines.

Despite a global slowdown in new hedge fund launches since 2021 and an increase in liquidations, multi-strategy platforms like Millennium and Point72 Asset Management have continued their growth. This growth is partly due to their capacity to pass certain costs onto investors, such as compensation and research expenses.

In its operational strategy, 30th Century Partners is considering an arrangement that would allow it to access investor capital as trading opportunities arise. This approach aims to prevent the rapid deployment of billions of dollars that could potentially impact returns negatively.

For stock trading, the firm plans to employ teams that trade with low net exposure, the difference between bullish and bearish bets. It intends to hire equity arbitragers who may capitalize on the vanishing spreads between different share classes of the same companies or between merger targets and acquirers. These teams may also leverage changes in stock volatility following periods of dislocation.

On the fixed income front, 30th Century Partners will have teams trading rates, credit, and foreign exchange. This includes macro portfolio managers aiming to profit from broad trends across these markets. The firm also plans to recruit for systematic strategies, which involve quant traders and those using the statistical arbitrage approach to exploit relative price movements of thousands of securities.

Baker, who left Morgan Stanley in 2008 and served as Asia head of business development at Millennium from 2013 to October 2021, has already filled key roles at 30th Century Partners. The firm now boasts a chief risk officer, a chief technology officer, and a chief data scientist in its leadership team.

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