A USD 100 million hedge fund targeting annual returns of 24 to 36 per cent is to be launched in Singapore in June by Commerz Capital International.
Commerz Capital says two main factors will set the new fund apart from others in the industry - greater transparency and zero management fees.
Investors will able to login and see daily updates of all the trades executed by the fund, providing full transparency in how it is managed, while Comerz Capital will not levy any management fees.
"In the last two years, 60 per cent of new funds launched were in Asia-Pacific and the hedge fund industry in this region is estimated to be worth USD 60 billion,' said Kishore M, CEO and principle of Commerz Capital. "To fully realise its potential, we need to demystify the perceived 'high risk' associated with hedge funds, which in reality, and statistically, are often less volatile than a conventional portfolio of equities and bonds."
"Commerz Capital is well placed to enjoy a fair share of the market," he added. "We have an excellent track record and our intended strategy to be transparent with our investors will appeal to high net-worth investors who want to know more about how their funds are managed."
Commerz Capital is registered with the Monetary Authority of Singapore as an exempt fund manager. The company selected Singapore as the preferred location for the launch because of the government's support for the industry and its efficiency in the registering of new funds. Kishore also trades his own account under his proprietary company Futures Capital Holdings, which recorded a performance of 99.05 per cent return (2003-2004) attested and certified by Ernst & Young.
"Hedge funds are fast gaining popularity amongst the investment community and there are market watchers who are concerned about the perceived relaxed regulatory environment surrounding hedge funds," said Kishore. "The industry needs to do its part to build credibility and avoid another Nick Leeson incident in the financial sector. For a start, fund managers should be more transparent about how they manage the funds."
Apart from Kishore's personal objective to take on bigger challenges, the idea to start a new hedge fund was mooted because of encouragement from business associates and acquaintances, since they have benefited substantially by implementing the strategies for their own portfolio.
The hedge fund will have an asset allocation of 75 per cent in options and the remaining 25 per cent in shares and futures. The strategies will be implemented in the US, UK, Japan and Australia markets. In addition, stocks of only the US markets will be bought however derivatives will be on currency, gold, commodities, treasury bonds, US Indexes (S&P500), ETF (QQQQ), Japan Index (NK225), UK (FTSE) and Australia (SPI200).
Other benefits of the fund include access to the money managers, no entry or exit fees, a target to achieve absolute returns and not peg to an index benchmark, investment strategy focus on consistent returns and preservation of capital, no lock-in period, and experienced money managers who will be investing their own funds.