China’s biggest investment bank is taking another leaf from the Goldman Sachsplaybook by creating a fund to back new and established hedge fund managers in China. Citic Securities Futures, part of the Citic Securities group, has established a Rmb2bn ($330m) fund of seed capital that will invest in local hedge funds, according to Jackie Fan, general manager of the bank’s innovation department. The asset management arm of another local brokerage, Hwabao Securities, is launching a similar fund with Rmb1bn to invest in partnership with KKM Capital, a Shanghai company dedicated to helping Chinese hedge fund managers set up businesses. There is growing interest in hedge funds in China as the nation’s wealthy look for more ways to invest their money and slow but steady financial reform offer budding managers more ways to play the markets. China has seen the fastest growth in new billionaires in recent years. It is now home to more than one in three of the wealthy individuals in the Asia-Pacific region excluding Japan, and the riches of those Chinese grew by 16 per cent to $3.1tn last year, according to Royal Bank of Canada and Cap Gemini. Citic Securities has seeded and bought stakes in funds before – putting $20m into Hong Kong-based VisionGain Capital in 2008, for example. Mr Fan announced Citic Securities Futures’ seed fund at gathering for investors and quantitative hedge fund managers in Shanghai last week called Battle of the Quants. Kenny Li, chief executive of KKM, who also helped organise the conference, said the Hongkuo district of Shanghai was working hard to attract more funds by trying to create a "hedge fund park" in the Citic Plaza on North Sichuan Road. "They are still working on a programme to help foreign managers set up, but for local guys they are offering big rental rebates and tax rebates for the business and the senior management to try and draw more people here," he said. Rents are already up to 40 per cent cheaper than in the Lujiazhui financial district in Pudong, which is south of Hongkou on the opposite side of the river, Mr Li said, while the tax rebates could be for 70 per cent of tax paid or more. Greater China focused hedge funds have had a strong year and are up 11.24 per cent in the first nine months of the year, according to Eurekahedge, a research group. Many of these funds are based offshore in Hong Kong because it is easier and cheaper to raise money, to short sell stocks and to trade other markets. Brian Ingram, who researches investment managers in China for a joint venture between Ping An and Russel Investments of the US, said that there were a growing number of impressive hedge fund managers inside China. "There is enough diversity of good managers to build a multi-manager portfolio, but not with much capacity," he said. "Even investing just $100m at the moment would be challenging." The Chinese securities regulator is loosening the restrictions within China. The watchdog has begun to allow some insurers to invest in futures markets and hedge funds, and it has been expanding the number of individual stocks that managers can short while encouraging brokerages to expand their securities lending businesses. Six foreign hedge funds also recently obtained approval to raise money onshore from Chinese investors for the first time – Canyon Partners, Citadel, Man Group, Oak Tree, Och-Ziff Capital Management and Winton Capital Management.