Rupert Foster (pictured), manager of the Matrix Asia Fund, believes that this year will see the start of global tightening, in the short term causing markets to become nervous and jittery but subsequently opening up opportunities first in interest rate-sensitive and then cyclical areas of the market.
GFM: What is the background to your company and funds?
RF: Matrix Group is a privately-owned financial services business founded in 1987 with areas of expertise including asset management, corporate capital, property and specialised finance. At the end of January, Matrix Group had GBP3.1bn in assets under management.
Matrix Alternative Asset Management, the single hedge fund business within Matrix Group, currently comprises five single manager hedge funds, the Matrix Asia Fund, Matrix PVE Global Credit Fund, Matrix Europe Fund, Matrix New Europe Fund and Matrix Macro Fund.
I joined Matrix in February 2008 and launched the Matrix Asia Fund in August that year. Before joining Matrix, in 2002 I founded FM Capital Management, subsequently Swiftsure Capital, and was portfolio manager of the Japan Pragmatist Fund, a Japanese long/short equity fund with assets of USD350m at its peak, for its four-year operation. Previously I was based in London and Tokyo with Mercury Asset Management from 1994 until 2001, running Japanese equity portfolios for institutional and retail clients on both relative and absolute return bases.
The Matrix Asia Fund is up 33 per cent since launch and has USD21.4m in assets under management. The fund invests both long and short in pan-Asian equities and has a portfolio of 30 to 50 stocks. It is a high conviction fund with a strong thematic and macro overlay. Actively-traded long and short books reflect the current market outlook and help to protect returns from precipitous market rises and falls. All the positions held are intended to generate alpha. The fund is targeting net returns of 15 to 20 per cent with lower volatility than the Asia-Pacific market.
GFM: What is the structure of your fund?
RF: The fund is an open-ended investment company domiciled in the Cayman Islands and listed on the Irish Stock Exchange.
GFM: Who are your key service providers?
RF: The fund’s auditor is PricewaterhouseCoopers, the legal advisor is Iliad Consulting, the fund’s administrator is Equinoxe Alternative Investment and Services (Ireland), and the prime broker and custodian is Morgan Stanley.
GFM: Have there been any recent changes to the management team?
RF: There have been two recent additions to my team. David Peerless joined Matrix last year as senior analyst for the Matrix Asia Fund, with a principal focus on China. He was previously was head of research at Evolution Securities China, based in Shanghai. Earlier he managed Procter & Gamble’s brand protection programme in China.
Sam West joined Matrix this year as a senior analyst. He has worked in research since 2005 and covered Asian stocks since 2006 for FM Capital Management and Cantillon Capital Management.
GFM: What is your investment process?
RF: In pursuing its objectives, we use two methodologies, fundamental company research with a thematic, macro and quantitative filter. Company research provides the majority of the alpha generated by the fund. The investment manager uses traditional techniques to assess the quality of each company’s fundamentals with particular focus on how and where it makes money, key product developments, management strategy and the key to its successful implementation, valuation and a share price catalyst.
Meetings with selected management teams assist us in forming our views. Additionally, anticipation of short-term earnings surprises usually entails assessment of the likely success or failure of new products, cost control and close attention to the company’s position within the cycle.