Fri, 12/09/2008 - 07:00
Tai Tam Capital'sHui-Wen Shiau (see attached photo) and Jun-Tsiang Lam outline the
thinking that is driving the investment strategy of their new Asian
Global Macro Fund.
HW: What is the background to your company?
WS/JT: Tai Tam Capital (TT) is
an Asian alternative asset management company founded by its
principals, Hui-Wen Shiau and Jun-Tsiang Lam
Shiau and Lam have transacted and worked together for over 10 years.
They have 40 years of combined Asian capital markets experience over
multi-asset classes with such firms as Credit Suisse, Deutsche Bank,
UBS and Lehman.
TT is looking to launch a USD100m Asian Global Macro Fund by our initial soft close of January 2009.
The fund strategy is to invest in all four asset classes across Asia + G7.
As a precursor to launching the Fund, TT has traded our proprietary
capital since Aug 2007 to July, 2008, achieving gross cumulative
returns well in excess of 50%+ over 12 months with a Sharpe ratio of
1.53 and -.12 correlation to S&P500
HW: Who is your prime broker?
WS/JT: Our prime broker is Newedge
HW: How and where will you distribute the fund? What is the profile of your current and targeted client base?
WS/JT: We are working with
Newedge's capital introduction team and our advisors to identify global
investors. Our targeted returns are 25%+ with a primary focus on
capital preservation; hence, we appeal to investors who appreciate
absolute returns, not relative and that risk of ruin is different from
HW: What is the investment process of your fund?
WS/JT: We use a tri-angulation process to identify trades which are most congruent with the outcome of:
HW: What is your approach to managing risk?
WS/JT: Dynamic risk allocation
which incorporates volatility of the asset. Position sizing is
critical to our success, not just calling the markets "right." Reduce
volatility by trading non-correlated assets. Maximum leverage is
relatively modest at 2x (1:1 debt to equity). The liquidity and
transparency of the instruments traded reduce the frictions of trading
and permit nimbleness in scaling in and out. Lastly, the fundamental
appreciation that a dollar of profit is different from a dollar of
loss. These are all particularly important criteria for investors in
HW: Has your performance been as per budget and expectations? Do you expect your performance or style to change going forward?
WS/JT: While we are certainly
encouraged by our past 12 month's return of 50%+ compounded annual
returns, our proposed fund's target return remains at 25%+ with a
traditional 10-15% volatility. As macro trading is highly scalable, we
do not expect our strategy to change as a function of fund size.
HW: What opportunities are you looking at right now?
WS/JT: We may well be entering
the final stages of this bear market even as this U shaped recovery in
asset valuation may be 6 months or multi-years away. As the unwind of
the past few year's theme of weaker dollar, strong commodities and weak
equities have played out over the past summer, we are now approaching a
true bear market where all assets sell off. For example, lower oil has
not led to an equity bounce. Oil turning below 105 would negate the
It may soon be long, long bonds.
HW: What events do you expect to see in your sector in the year ahead?
WS/JT: The true worry for
systemic risk is not stagflation as Volcker solved it neatly by hiking
rates to 18% but a financial wipeout which leads to a Japan like
recovery of the past 15 years. Thankfully, we have a Fed Chairman who
cut his teeth academically warning about deflation and the
ineffectiveness of ZIRP (zero interest rate policy).
HW: How will these changes/future events impact on your own portfolio?
WS/JT: We are not investors who
get caught in the value trap as the market sinks. We shall continue to
trade nimbly in these market conditions both on the long and short
side, including volatility plays.
HW: What differentiates you from other managers in your sector?
WS/JT: While macro may be the
flavor of the day, we would like to differentiate our macro strategy as
across all asset classes in asia +g7 which greatly expands our
opportunity beyond today. We target large moves in asset prices with
modest leverage and not mean reversion trades with high leverage as
other macro funds.
The inefficiencies of the Asian markets create bigger opportunity sets
than trading only G7. We believe that understanding what Asian and
Middle East investors are doing with their USD-based economies and
investments will provide us a better picture of the world than looking
at it through G7 eyes.
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Thu, 25 Dec 2014 00:00:00 GMTGroup Operational Risk Management, Vice President | Investment Banking
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