Alp Ercil is closing his $3 billion flagship hedge fund after a moneymaking 14-year run and will convert his firm into a family office, said a person familiar with the matter.
Ercil is winding up Asia Research & Capital Management Ltd.’s (ARCM) distressed-asset fund for personal reasons and has been notifying investors and employees in recent days, said the person, who asked not to be identified discussing private information. Yusuf Haque, ARCM’s COO, declined to comment.
ARCM has been one of the largest distressed-asset firms in Asia, investing across equity, credit and commodity markets in the region and globally. The Hong Kong-based firm had just one annual loss — of 1% — since its inception, said the person.
ARCM will maintain a smaller staff to manage partner capital after the hedge fund closes and money is returned to investors, said the person, declining to share further details.
Ercil, 51, honed his skills making global investments in energy and cyclical industries at New York-based Perry Capital, in addition to wearing the Asia head hat. He founded ARCM in 2011, staffing it mostly with colleagues from Perry Capital’s Hong Kong office initially. The firm expanded to Dubai during the pandemic.
Its latest flagship distressed fund, the fourth in the series, has returned an annualized 19.5% since it started five years ago, including a nearly 10.5% return in 2024 and about 1% this year. The gains were generated without investments in the technology industry, which has sparked market rallies in recent years led by the gravity-defying Magnificent Seven giants.
The fund went on a buying spree in March and April 2020, bargain-hunting mostly developed-market, investment-grade credit with 10-year or longer durations that had been caught out during the indiscriminate selloff in the early months of the pandemic. The bets included debt of U.S. energy companies Apache Corp., Energy Transfer LP and MPLX LP.
Avoiding what it considered the overhyped electric-vehicle and solar industries, ARCM later heaped bullish bets on commodities and stocks of companies in traditional sectors benefiting from the transition to cleaner energy. For example, the replacement of older, less-energy-efficient air-conditioners and other industrial upgrades boosted demand for metals such as lithium, copper, aluminum and steel. The switch to electric vehicles also required power grid upgrades.
In the past two years, ARCM bought Japanese bank stocks, betting on the normalization of domestic interest rates as the central bank ended decades of ultraeasy monetary policy, said the person.
ARCM already returned $1 billion from fund IV to investors last year. The remaining $3 billion will be handed back in an orderly manner as liquid investments are wound down, the person said. Apart from its flagship distressed funds, ARCM raised several billions of dollars for co-investment vehicles for specific opportunities.
ARCM’s wind-up marks the closing of yet another multibillion-dollar firm started in the heady years of the Asia hedge fund industry. The years just before and after the 2008 global financial crisis saw a number of high-profile Asia hedge funds created by expatriates who trained at global banks or hedge funds. Now the ranks of them have thinned.
Segantii Capital Management returned money to investors last year after the firm, its founder Simon Sadler and a former trader were charged with insider trading ahead of a block trade. Set up in 2007, the Hong Kong-based firm’s assets peaked at $6.2 billion in late 2021. Segantii and Sadler have pleaded not guilty to the charges.
While still going, the fund of former Lehman Bros. Holdings Inc. proprietary trader Benjamin Fuchs, BFAM Partners (Hong Kong) Ltd., saw assets shrink from $5 billion in 2021, after being caught up in a wave of Chinese property developer bond defaults as Beijing tried to burst the real estate bubble.
Other Asia-based managers that have shut their hedge funds include longtime Goldman Sachs Group Inc. proprietary trader Morgan Sze and ex-Highbridge Capital Management LLC regional head Carl Huttenlocher. Tybourne Capital Management, helmed by Lone Pine Capital LLC’s former regional head Eashwar Krishnan, is making a comeback to the hedge fund business after shuttering its oldest fund during the post-2008 stock bull run, which made it difficult to make money from bearish wagers.