CIC to invest 6% in hedge funds by 2010

The $200 billion China Investment Corporation (CIC) will have between $4 and $6 billion invested in hedge funds by the end of this year, and will develop in-house expertise including long/short under Felix Chee, special adviser to the CIO, as part of a wider recruitment drive which includes more than 30 new positions.

CIC is looking for 33 new staff, including 15 investment professionals in asset allocation and strategic research, public market investments, private market investments, and tactical investments.

Speaking at GAIM International, Chee said CIC had a hedge fund investment target of between $10 to $12 billion to be invested by the end of 2010, with the sovereign fund adopting a measured approach and a preference for managed accounts.

The core will be direct with a focus on strategic relationships, with fund of funds adding diversification and access to investment due diligence, he said.

Chee said CIC focused on two key factors: the investment approach and competency of a manager’s approach.

As previously reported on conexust1f.flywheelstaging.com,the recent CIC re-structure saw the scrapping of its equity,
alternatives and fixed income divisions and the creation of four new arms to sit alongside the strategic asset allocation and research department.

Those four parts are: public markets; private markets; hedge funds; and special situations, including very large strategic stakes such as the Blackstone transaction.

Of the $200 billion in funds under management, approximately $90 billion is invested domestically and $110 billion is outward bound.

Chee said working at CIC, where he had been since its inception in September 2007, had been a very positive experience because “there has been a lot of opportunity, a lot of capital, and a clean balance sheet”.

He was previously head of University of Toronto Asset Management, which manages the university’s pension and endowments, and has a 15 per cent allocation to hedge funds across 30 managers including 16 fund of funds.