Veteran investor Alp Ercil is shutting down his $3 billion hedge fund, marking the end of a successful 14-year run, as he shifts his firm’s focus to managing family wealth. According to a source familiar with the decision, Ercil is winding down Asia Research & Capital Management Ltd. (ARCM) for personal reasons and has been informing investors and staff about the transition.
ARCM, a Hong Kong-based firm specializing in distressed assets, has been a major player in Asia, investing across equity, credit, and commodities. Since its launch, the fund has recorded only one minor annual loss of 1%. Following its closure, ARCM will retain a smaller team to oversee partner capital.
Ercil, 51, built his expertise in global investments at Perry Capital before launching ARCM in 2011, initially recruiting colleagues from Perry’s Hong Kong office. The firm later expanded to Dubai during the pandemic.
A History of Strategic Investments
ARCM’s flagship distressed fund, the fourth in its series, has delivered a 19.5% annualized return over the past five years. In 2020, during the pandemic-driven market downturn, the firm seized opportunities in investment-grade debt, including bonds from U.S. energy firms such as Apache Corp., Energy Transfer LP, and MPLX LP.
Avoiding the tech sector and what it saw as overhyped electric vehicle and solar industries, ARCM focused on commodities and traditional sectors poised for growth due to clean energy transitions. Its investments benefited from rising demand for materials like lithium, copper, aluminum, and steel.
More recently, ARCM turned to Japanese bank stocks, betting on higher interest rates as the Bank of Japan moved away from its long-standing ultra-loose monetary policy.
A Broader Shift in the Hedge Fund Industry
ARCM had already returned $1 billion to investors from its fourth fund last year. The remaining $3 billion will be distributed in an orderly manner as investments are liquidated. In addition to its flagship funds, ARCM raised billions in co-investment vehicles targeting specific opportunities.
Ercil’s decision to wind down the hedge fund is part of a broader trend in the Asia-based hedge fund industry. Several high-profile funds established in the years surrounding the 2008 financial crisis have since shut down.
For example, Segantii Capital Management returned investor funds last year after its founder, Simon Sadler, and a former trader were charged with insider trading. Similarly, BFAM Partners, led by former Lehman Brothers trader Benjamin Fuchs, saw assets shrink following a wave of Chinese property developer bond defaults.
Other hedge fund managers, such as Morgan Sze (formerly of Goldman Sachs) and Carl Huttenlocher (ex-Highbridge Capital), have also shuttered their funds. However, some firms, like Tybourne Capital Management, are making a return to the hedge fund space after years on the sidelines.
Ercil’s pivot to a family office reflects a growing trend among hedge fund veterans who choose to focus on managing their own wealth rather than external investor capital.
