China International Capital Corp is preparing to launch a $500m fund of hedge funds targeting international investors, as renewed interest in Chinese equities and quantitative investment strategies creates opportunities for alternative asset managers, according to a report by Bloomberg.

The Chinese investment bank's capital advisory solutions team could launch the vehicle as early as November, with allocations primarily focused on Greater China and Asia-Pacific equity strategies. The fund will target university endowments and family offices across Hong Kong, Europe, the US and the Middle East, alongside an investment from CICC itself.

Approximately half of the capital is expected to be allocated to fundamental equity and quantitative hedge funds operating in Greater China, with the remainder diversified across multistrategy and macro managers. The investment mandate will also extend to other Asia-Pacific markets, including Japan, to reduce geographic concentration.

CICC's capital advisory team has been researching global hedge funds since 2016 and has allocated proprietary capital to between 15 and 20 managers simultaneously since 2020. According to marketing materials reviewed by Bloomberg, the team screens more than 500 funds annually, conducting detailed assessments of approximately 10%. Its proprietary hedge fund investments generated an annualised return of 12.7% between July 2023 and August 2026, with no calendar-year losses during the period.

The proposed launch follows growing international interest in Chinese hedge funds, supported partly by developments in domestic artificial intelligence technology. Quantitative manager Meridian & Saturn Capital secured a $1bn mandate from a Middle Eastern sovereign wealth fund earlier this year, while Qube Research & Technologies expanded its China long-only strategy more than tenfold in the year to January.

However, the fundraising plans come amid continued volatility in Chinese equities, with the CSI 500 Index down approximately 11% this year as concerns over economic growth and AI-related earnings weigh on valuations. The broader MSCI Asia-Pacific Index has gained more than 11% despite recent market turbulence.