Citic Hedge Fund Will Focus on Yuan, Other Emerging Currencies

Jan 17, 2014 12:04 pm ET

Jan. 17 (Bloomberg) -- Former FX Concepts LLC executives Robert Savage and Ron DiRusso are starting a hedge fund with Citic Capital Holdings Ltd. that will trade emerging-market currencies with a specific focus on the Chinese yuan.

“As the renminbi becomes a viable currency, the need for the region’s investors to have a better currency program in place to handle those risks is going to go up,” Savage, formerly chief strategist at bankrupt FX Concepts, said in a phone interview. “We’re trying to fill that need.”

Savage is chief executive officer of CCTrack Solutions and DiRusso is chief investment officer, Citic Capital said today in a statement. Renminbi is another way to refer to the yuan.

The fund will serve institutional investors in North America, Europe and Asia and will begin trading in currencies, bonds, commodities, equities and futures in the first quarter, according to Citic Capital, which is backed by the sovereign- wealth funds of China and Qatar and manages more than $4.3 billion.

CCTrack Solutions is “going to be trading emerging markets in general as part of our opportunity set, with a keen interest in what’s going on in China,” Savage said. “We’re going to have some very diverse strategies, and through that we’ll have reduced risk.”

China has signed agreements to trade the yuan more freely with financial centers from Singapore to London and the euro area, and is loosening exchange controls as part of a once-in-a- generation economic overhaul. The yuan overtook the euro as the second most-used currency in global trade finance last year, according to the Society for Worldwide Interbank Financial Telecommunication.

‘Full Convertibility’

“My expectation and the expectation of the team is that the renminbi is going to continue to move toward full convertibility and potentially reserve-currency status,” Savage said. “It could happen in the next decade, and people are going to be surprised in three years when it’s trading much more aggressively and liquid.”

New York-based FX Concepts, once the world’s biggest currency hedge fund, peaked at about $14 billion under management in 2007. The firm’s remaining assets were sold as part of bankruptcy proceedings that began in October.

Founder John Taylor said on Jan. 9 he plans to re-enter the foreign-exchange asset-management business again one day and is writing a weekly newsletter.

FX Concept’s assets under management shrank to $661 million as of Sept. 26, from about $12 billion in 2009, according to data from the company’s investor website. Its Global Currency Program had lost 13.9 percent in 2013 as of August, according to a company report. It lost 3.11 percent in 2012 and 14.47 percent in 2011.

--With assistance from Liz Capo McCormick in New York. Editors: Greg Storey, Paul Cox