Nipun Capital, the San Francisco based manager headed by former Barclays Global Investors MD Pooja Malik, has launched a China A-shares long/short fund.

The Nipun China Total Return Fund started trading in January with $5m from the firm’s partners and a family office, and was reportedly in talks with a US-based institutional investor over a possible $50m seed investment.

The fund uses a stock selection model similar to those of the group’s existing strategies and uses minimal leverage to achieve less volatile returns.

The firm’s principals, Pooja Malik and Dr Kenneth Hui, will act as portfolio managers, according to a source familiar with the matter.

The A-shares market was the world’s worst performing equity market in 2018. However, Asia, particularly China, continues to experience significant economic growth and capital migration.

Many leading asset managers believe China offers a rich base for alpha generation. Marshall Wace, Allianz GI and NeubergerBerman have all launched dedicated A-share funds in recent years notwithstanding that shorting individual stocks in the market remains constrained.

The fund will use UBS as prime broker and SS&C as administrator.

Nipun Capital currently runs $200m in assets for clients. The flagship Asia Total Return Fund was up roughly 7.5% in 2018, but assets dropped from a peak of $800m+ to $129m after disappointing returns in 2016/17.

Nipun Capital declined to comment.

Nipun Capital launches long/short China A-shares fund on AsiaHedge.