Japan’s Mizuho Corporate Bank announced it is planning to increase the volume of its Cayman-registered CTA ‘Crystal Japan Fund’ more than eight-fold over the next five years to ¥100 billion (US$1.1 billion).
The bank aims to attract subscriptions for its US-managed fund specifically from domestic pension funds.
Mizuho Corp’s commodity trading adviser fund is expected to double its asset value to ¥30 billion from currently ¥13 billion by the end of the year, said Yuko Hirai, senior vice president of Mizuho Corp’s global alternative investment section, according to Reuters.
Mizuho Corporate Bank is the wholesale banking arm of Japan’s second largest bank Mizuho Financial Group.
Mizuho’s CTA ‘Crystal Japan Fund’ produced an annual return of 42.39 per cent on a currency-hedged basis, Hirai said.
The fund’s cumulative 10-year return of 134.6 per cent outperformed Barclays’ CTA index 30 per cent, he said.
CTAs have potentially high returns but a low correlation to other hedge fund strategies or to equity markets. They may thus attract subscriptions from pension funds who want to diversify their investments.
CTAs displayed a relatively low volatility in last year’s market turmoil. They utilise futures or futures options which are highly regulated and liquid. Additional benefits of CTAs are the low trading transaction costs and minimal counterparty risk.