HEDGE fund Loyal Valley Capital Co. responded to pushback from clients who lost a third of their money on a product last year, as the 70 billion yuan (US$11 billion) fund manager became the latest target of investor ire in China. One of the firm’s hedge funds allegedly deviated from its theme of tech and consumer stocks, while repeated requests for dialogue with fund manager and founder Lin Lijun were rejected as losses mounted, domestic media reported, citing a letter from an unnamed group of investors addressed to the nation’s securities regulators. Lin joins a growing list of prominent fund managers in China to come under criticism from retail investors for their performance. The asset manager denied the accusations, saying the letter contains many “misstatements” and reflects “irrational” investor requests after the losses, which it called temporary. The asset manager said it is now expanding its research team to win client trust though long-term performance. The mostly private equity-focused firm manages more than 20 billion yuan in hedge funds through an affiliate under the same brand. Loyal Valley and Lin, who turned to private fund management in 2015 after starting and building up what later grew into top mutual fund house China Universal Asset Management, have become the latest target of investor frustrations after a volatile year for China’s stocks. E Fund Management Co.’s star manager Zhang Kun received “verbal abuse” after a popular trade unraveled in the first quarter. Shanghai Minghong Investment Management Co. saw big redemptions following a stretch of underperformance. Top quant fund Zhejiang High-Flyer Asset Management apologized two weeks ago after record losses. The net value of a hedge fund product which investors bought from Loyal Valley at the beginning of last year dropped to 0.66 yuan as of Dec. 31, the letter says. Loyal Valley acknowledged the letter. The letter has drawn signatures from more than 40 investors, The Paper cited one of the authors, under the pseudonym Li Hai, as saying. China’s retail investors, who still dominate stock trading volumes, are exerting more pressure on fund managers as the internet gives them greater influence. High net-worth individuals accounted for 43 percent of assets managed by Chinese private securities funds, as of end of 2020, according to the Asset Management Association of China. (SD-Agencies) | 