Hong Kong-based Richland to shut hedge funds in surprise move

Hong Kong-based Richland Capital Management Ltd is shutting down its hedge funds despite outperforming peers, four sources said, an unexpected move for a successful operator in an Asian industry which is struggling to raise assets.

Richland is one of Asia's best-known hedge funds. It manages $100 million between two funds and advises on an additional $150 million for wealthy clients, according to a fund information document obtained by Reuters.

The hedge fund, founded in 2006 by former HSBC Holdings Plc trader Alex Au with Eva Lo, who earlier worked at Credit Suisse Group AG , has made money for its main Richland Asia Absolute Return Fund each year since launch, including a 5.3 percent gain in 2008.

An e-mail to Lo and Au remained unanswered. The sources, who have direct knowledge of the matter, declined to be named as they were not authorized to speak on the matter.

It was not immediately clear why Richland was closing.

Typically, hedge funds shut down in response to poor performance or clients withdrawing large amounts of money, but Richland has suffered from neither.

"Today is the day when funds are winding down," one of the sources said.

Launched in December 2006 with $10 million, the Richland Asia Absolute Return Fund managed about $75 million in February this year, the fund document showed.

The fund gained 14.1 percent in 2012 and was up about 6 percent in the first quarter of 2013, according to fund performance data seen by Reuters, outperforming a 10 percent gain in the benchmark Eurekahedge Asia index last year and 5.8 percent in the March quarter.

The second fund, Richland Emerging Opportunities Fund, returned 13.1 percent last year and was up about 18 percent in the first quarter of 2013.

So far, 23 hedge funds have shut down in Asia, compared with 18 launches, according to data from Eurekahedge. Last year, 169 hedge funds closed in Asia, exceeding 139 launches.

(Editing by Daniel Magnowski)