Hedge fund Monolith returns 53% year to date on AI, data centre and China bets

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By Summer Zhen

HONG KONG (Reuters) – Monolith Management, a Hong Kong-based tech-focused hedge fund, has returned 53% so far this year, benefiting from investments in semiconductors, data centres and a rally in Chinese investments in September.

With $300 million in assets under management currently, Monolith will launch a new fund in January, growing its long-short equity strategy to about $500 million.

WHY IT’S IMPORTANT

Goldman Sachs estimates Asia’s equity long-short funds returned 12.8% through the end of November, with Monolith comfortably outperforming in a volatile year driven by uncertainties around global interest rate policies, the U.S. election and China’s stimulus measures.

CONTEXT

The fund bet on U.S. and Taiwan semiconductor stocks in the artificial intelligence supply chain, and U.S. data centre infrastructure, including liquid cooling solutions, power and network connectivity, said co-founder Timothy Wang, who was previously at Boyu Capital.

Wang noted the scale of data centres in the U.S. is set to triple in coming years. The fund also gained from exposure to crypto and bitcoin miners that provide power to data centres.

The fund significantly boosted net exposure to China, mainly in internet and consumer stocks, to about 50% at the end of September when the government announced huge monetary stimulus.

It cut that exposure back to about 20% in October, avoiding the 17% pullback in Chinese shares since then.

KEY QUOTES

“The best way to survive in China…is to be nimble,” said Wang, adding market volatility is likely to increase next year driven by the Trump administration’s unpredictable policies and high U.S. stock valuations.

“We’ll strengthen our hedging positions and maintain cash reserves to take advantage of potential market dips.”

(Reporting by Summer Zhen; Editing by Kirsten Donovan)