James Williams, news editor, Hedgeweek

Charlie Chan’s fund up 20 per cent, Fortress launches Asia volatility fund, City Financial to appoint Nikko AM as investment sub-advisor, while Citigroup hires MS’s Davey to head PB sales for Greater China

Thu, 31/05/2012 - 18:20

Charlie Chan, the founder of Singapore-based Charlie Chan Capital Partners Pte, has had a great start to the year. The Splendid Asia Macro Fund is up 20 per cent through April this year, reported Bloomberg this week, as it bought Asian currencies, fixed income and equities, and sold the yen on the back of ongoing stress in the eurozone. The Asia-focused fund has seen assets grow from USD40million to USD60million since it commenced trading last July. The fund has generated about 14 per cent since inception through April according to Chan.

Launching at such a volatile time actually worked in the fund’s favour, said Chan, as it allowed them to buy things as the market fell at good prices. “Asia will be the place to be as the European crisis will slow things down,” commented Chan, who headed up foreign exchange strategic trading at Credit Suisse prior to setting up the fund. Chan shorted the Japanese yen because there isn’t any obvious economic recovery and also faces the pressure of a shrinking population. Despite the fund’s good performance, though, Chan is in no hurry to increase AUM as that may lower returns. He added that whilst there are probably more people looking to deploy compared to last year the European crisis means those are putting money to work are doing so a bit more slowly. Chan set up the firm with former Credit Suisse prop traders Lam Hoi Leong and Albert Neo.      


Despite all the chaos that continues to emanate out of Europe as Greece staggers towards another crucial election next month in an attempt to form a new government, the Wall Street Journal reported this week that hedge fund behemoth, Fortress Investment Group LLC, had launched a new Asia-focused fund to capitalise on market volatilities in Asia. The Singapore-based Fortress Convex Asia Fund commenced trading 1 May with USD55million in day one capital according to people familiar with the matter. David Dredge and Andrew Wong, former portfolio managers at Steve Diggle’s Artradis Fund Management, are to run the fund. Dredge was hired by Fortress as co-chief investment officer at its convexity strategies group.


The new fund, which is long volatility, trades a variety of instruments including options on equities, interest rates and currencies in Asia as well as volatility instruments. The Convex Asia fund comes on the back of the recent decision by Fortress to close its commodities fund last week because of poor performance; the fund was down 12.57 per cent through April this year.


Convex funds that trade volatility are also known as Black Swan funds thanks to the popular book written by Nassim Nicholas Taleb and by their very nature profit from ‘fat tail’ events; the only problem is these funds tend to be expensive. Indeed, the lack of volatility in the markets due to government intervention was the primary reason why Artradis shut down last year. Fortress’s fund seeks to deliver “non-correlated returns in normal markets and out-sized returns in stressed or dislocated markets, providing ‘Tail Risk’ protection”, according to its marketing document. It will attempt to manage capital depletion within clearly defined parameters but precisely what those parameters are is unclear.      
  

London-based City Financial plans to appoint Nikko Asset Management as non-discretionary investment sub-advisor to the City Financial Asian Absolute Growth Fund. City Financial will remain as investment manager but as part of the transition Aoifinn Devitt, lead advisor to the fund, will join Nikko AM. The move will add Nikko AM’s global distribution network and investment management expertise to a fund that has outperformed all but one in the Asian hedge fund sector year-to-date based on Eurekahedge’s Asia ex-Japan hedge fund index. Commenting on the fund’s performance, City Financial’s CEO, Andrew Williams, said: “We are now in a position to accelerate the fund’s asset growth, and we believe it could be more than twice its current size, without impact on the performance that investors have experienced. Nikko AM is a highly regarded in-market Asian investment firm and we see this partnership as a great opportunity for the fund.”
 
In a continuing trend of Asian hedge funds hiring COOs to shore up their operational frameworks and appeal to institutional investors, Reuters this week reported that Hong Kong start-up Expedition Advisors has hired Kam Bahra, the former chief executive of Sparx Asia Investment Advisors. Craig James, the fund’s founder and former head of Asian trading at New York-based AM Investment Partners, confirmed the hire. Bahra is a former Deutsche Bank executive with more than 20 years’ industry experience. He left Sparx Group at the end of 2011.
 
Finally, in yet another people move, Citigroup have laid down their intent to build market share in the Asian prime brokerage space by appointing Morgan Stanley’s head of prime brokerage sales for Singapore, Carl Davey. Davey will lead prime brokerage sales at Citi for the Greater China region. Other new hires for Citi – who were ranked Number 7 in a recent survey of Asian prime brokers with USD6billion in AUM – include David Stanbridge, former COO of Hong Kong-based hedge fund Kilometre Capital. It is believed that Davey will be replaced by Stella Jaeger. 

 

 


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