HONG KONG — One of the largest China-focused hedge funds has closed up shop, letting go some dozen employees and giving back money to investors.
Dynasty Asset Management came apart amid huge gains this year in China’s publicly traded companies. The poor performance of Dynasty’s flagship fund widened a rift between the founding partners — one from the U.S. and the other from the mainland — who disagreed about how aggressively the Shanghai-based firm should raise money from new investors hot on getting into China.
The firm’s unraveling highlights a growing risk for hedge funds in Asia, and their investors. Smaller, more thinly traded markets offer fewer investment possibilities than those in the developed world. The more assets under management, the greater the challenge to find lucrative stock plays.
Dynasty’s assets peaked at about $400 million. While it didn’t lose money on its investments, its performance suffered in the past two years and previously enthusiastic investors chose to get out. Assets shrank to between $80 million and $100 million when it dissolved.
