Enhanced Investment Products has launched a new offering investing in Asian high yield convertible bonds with an initial investment of USD1m.
Enhanced Investment Products has launched a new offering investing in Asian high yield convertible bonds with an initial investment of USD1m.
The second fund in its portfolio of products that offers absolute returns, the Asian High Yield Convertible Bond fund joins the EIP Overlay fund which concentrates on non-directional arbitrage trading.
EIP’s new fund has been launched to take advantage of the high yields currently on offer in Asian convertible bonds. It is long biased and does not pursue an arbitrage strategy but seeks to enhance the investment through delta hedging and trading the optionality embedded within each bond position.
The fund has a unique structure with a life of three years, monthly liquidity after one year and an automatic liquidation trigger with return of proceeds to investors when NAV increases 70 per cent from inception. Performance fees are only paid on crystallized profit.
If yields remain attractive, a second tranche of this fund will be offered to interested investors in the third quarter of 2009.
Yvon Choi, senior portfolio manger at EIP, has over 15 years experience in convertible bond trading and is responsible for managing and trading the EIP High Yield Convertible Bond Fund. Choi will be joined by a senior credit and equity analyst in the coming months.
Choi was head of trading for Asia (inc Japan) for Elliott Advisors, an American hedge fund with assets in excess of USD10bn, until September 2007 where he mainly developed the CB business and equity derivatives business. Prior to this, he managed the Pan Asian CB and volatility portfolio at Nomura’s internal hedge fund until February 2005. Choi reports to Tobias Bland (pictured), chief executive of EIP.
Bland says: ‘Yvon is new to the team however he has hit the ground running and has been very instrumental in the development of our new CB fund.
‘Launching a new fund in this current economic climate is testament to our strong performance in 2008 and the excellent investment team we have been building up over the past year. In addition, our distribution capability has been significantly strengthened by our business partnership with triple A partners.’
Choi adds: ‘With regards to risks the fund will hedge interest rate risk exposure to protect against rises in rates during the life of the fund. The fund will hold a diversified basket of holdings, no more than 20 per cent in any one industry sector or country and no issuer will represent more than eight per cent of the fund NAV. The seed investment will kick start the fund and we aim to provide investors with a solid annual return of around ten to 20 per cent with low volatility compared to pure equities.’
