Fairfield Straits Lion Asset Management Limited is launching its second Asian hedge fund investment, the Fairfield Ludgate Hill Asian Arbitrage Fund.
As with all FSL products, the new fund will seek to serve investors who desire conservatively managed, low relative volatility, low correlation hedge fund products, consistent with the investment philosophies of FSL's joint venture partners, Straits Lion Asset Management Limited and Fairfield Greenwich Group (FGG).
FSL and FGG together have invested approximately USD 20 million in the new fund, which will be managed by Ludgate Hill Investment Management. It will pursue an absolute return strategy through discount arbitrage strategies to exploit the discrepancies in value between different types of securities issued by the same company.
The strategy would take advantage of price anomalies between Convertible Bonds (CB) or Depository Receipts (DR) and their corresponding local shares in the Asian financial markets. Fairfield Ludgate Hill's market neutral portfolio can profit from both up and down markets. As with all of the core funds on the FGG and FSL platforms, Fairfield Ludgate Hill will provide full position transparency to FGG and FSL to enable timely risk analysis and compliance monitoring.
Ludgate's portfolio management team is lead by Mike Djen, who has over 10 years of CB/DR trading and origination experience in Asia. Before establishing Ludgate, Djen managed Deutsche Bank's Asia ex-Japan CB/DR origination desk. Prior to that, he set up and ran JP Morgan's Asian CB/DR trading desk and managing to maintain a profitable trading book through the 1997-98 Asian crisis.
"The addition of Fairfield Ludgate Hill to our platform provides our investors access to an excellent manager with strong experience in a niche Asian-focused arbitrage strategy," said Tong Foo Cheong, CEO of FSL. "The Fund's low correlation to Asian markets also holds diversification benefits for our Asian Multi-strategy fund, bringing us one step closer to the launch of FSL's Asian multi-strategy fund later this year. We will continue to seek out and include first-rate alternative asset managers who share our capital preservation philosophy, such as Ludgate, to our product line- up."
Mike Djen, Director of Ludgate Hill Investment Management Limited, commented: "FSL's and FGG's investments underline their confidence in our investment team and process. We continue to be optimistic about the arbitrage opportunities available to us in Asia, as these markets remain less efficient than those of the U.S. and Europe."
He added: "Ludgate's strong relationships with local financial institutions enhance our ability to exploit opportunities in the region resulting from fungibility constraints in highly regulated markets such as Taiwan and Korea. Additional issuance in the Asian CB/DR markets keep us confident in our ability to deliver absolute returns to our clients."