Threadneedle has launched a new hedge fund, the Threadneedle Asia Crescendo Fund, that is designed to combine the asset manager’s expertise in Asian equities with its experience in running
Threadneedle has launched a new hedge fund, the Threadneedle Asia Crescendo Fund, that is designed to combine the asset manager’s expertise in Asian equities with its experience in running equity long-short portfolios.
Threadneedle says two main beliefs underpin the rationale for the launch. First, it sees a long-term trend developing in which capital and wealth is transferred from developed to emerging markets. Asia is a key region in this equation and the trend is expected to create many investment opportunities, both long and short.
Secondly, Threadneedle believes Asian-ex-Japan equity markets to be highly structurally inefficient, characterised by incomplete analyst coverage, poor corporate governance and weak capital markets. The firm argues that its track record of fundamental stock research in the region leaves it well positioned to benefit from the opportunities arising from this inefficiency.
The fund is managed by Jan de Bruijn, a senior manager on Threadneedle’s Far East and Asia equities team who joined the firm in 2006 and has 15 years’ experience of managing Asian portfolios.
‘Due to the sheer scale of the region, analyst coverage can be patchy beyond the well known names, and this provides a fertile hunting ground for us given our emphasis upon primary research and fieldwork,’ de Bruijn says. ‘In the course of this research we find lots of valuation anomalies in the region. The long-short structure increases our ability to turn those anomalies into alpha for clients.’
Short positions will be used as a risk control mechanism to hedge regional and sector risk inherent in long positions, to provide additional funds for extending long investments, and to benefit from expected changes in relative value between stocks, as well as to benefit from absolute falls in share prices.
The fund will have a variable directional bias, allowing it to switch between net long and net short according to market conditions. There will, however, be a general long bias, reflecting the team’s belief that Asian equities are in a secular uptrend.
‘Asia is clearly a hugely important investment region and our fund managers have built a strong track record of alpha generation in the region,’ says Lorin Gresser, Threadneedle’s head of product strategy.
‘The first fund in our Crescendo hedge range was launched in 2000 and we have now expanded our offering to 10 funds. The rapid development of Asian markets presents good opportunities for skilled stock pickers, both on the long and short side, so expanding the Crescendo range into Asia unlocks real potential for our investors.’
