Lotus Peak Capital, the Singapore investment manager, launches a fund of hedge fund that aims to tap into the success - so far - of Japanese fiscal and monetary policy.

Singapore-based investment manager Lotus Peak Capital has launched a new fund of hedge funds product that aims to capitalise on Japan Prime Minister Shinzo Abe's economic growth strategy. 

Aptly named the Abenomics Long Short Fund, the product will invest in 10 Japan-focused managers across different strategies, with a preference for equity markets, Stephane Pizzo, managing partner, has confirmed with this publication. These include the J-Wellness Fund, which invests in Japan's health-care industry and posted 40 per cent return in 2013, and the Kotishiro Fund, the United Managers Japan-managed fund that returned 32 per cent in the same year. 

"The reason we did a fund of funds is to have access to different sources of alpha. If you believe in this Japan story, you could buy an index tracker and wait -- and that is fine but probably fairly volatile - you are going to miss out on what we think is the really interesting story which is the Third Arrow. Entire sectors of the economy need to be restructured... and that is where the alpha is," said Pizzo in an email to WealthBriefingAsia.

"The Abenomics funds is built to participate in the longer term upside of the market... in the fact that, going forward, some stocks will do much better than others within the same sectors; the dispersion will increase, thus creating an ideal playground for long/short strategies," he added. 

The new fund will start on 3 February 2014 with some $15 billion of initial capital from Swiss and Asian family offices. According to Pizzo, the decision to pursue Japan came after local hedge funds delivered one of the most positive performances in 2013, returning a record 28 per cent as per the Eurekahedge Japan Hedge Fund Index.