The Asian aurora

Fri Jan 20, 2012

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Some of the best minds are returning to the basics of hedge fund investing – running money for themselves and a group of like-minded investors


By Aradhna Dayal

nullThe year 2011 opened with a mixed bag of news: heartbreaking stories of several blue-blooded Asian hedge fund managers finally throwing in the towel, coupled with a few heart-warming stories of valiant comebacks.

Whether it is the rigour of coping with harsh markets, the frustration of dealing with incessant demands for performance, the thorny path to win quality capital or just the desperation of their strategies being boxed in by institutional investors and regulators - I find a cross-section of managers in Asia saying: "Enough is enough."

Prominent among these are KH Paik's CoreVest Partners - a pioneer in the Asian hedge fund world, Sanjiv Bhatia's Isometric Capital (seeded by FRM and one of the most watched launches of 2009), Charle Peza's Thaddeus Capital, Boyer Allen's China and Asian funds, and credit veteran Tribridge Investment Partners, plus the change of the old guard at what was once PMA.

Then there are managers such as John Zwaanstra, credited with running one of the most successful Japan funds of all time - at Penta Investments, who is returning external capital to investors and choosing to run mostly his own, 'friends and family' money in a discreet fashion.

Zwaanstra joins the likes of global managers such as Soros and regional veterans such as Michael Nock, who are choosing much the same path. In many ways, this signals an inflection point in the Asian hedge fund industry, whereby some of the best minds are returning to the basics of hedge fund investing - running money for themselves and a small group of like-minded investors in a high-conviction, more flexible manner, without the stress of over-institutionalisation and stifling regulation.

For those of us that have been associated with the Asian hedge fund industry since its start in the late 1990s, this indeed feels something like the end of an era.

My view, however, is that the pessimism being associated with these closures/revamps is excessive. We are already hearing of a second innings for several high-quality managers, and the January issue of AsiaHedge features re-launch updates on the likes of Kenny Arnott of Arnott Capital and John Foo of Kingsmead (formerly of FrontPoint).

Then there are home-grown funds such as Danny Yong's Dymon Asia (up 17.8% last year), John Ho's Janchor (up 8%), Joe Zhou's Ortus (5.7%) and Segantii (up 40%), that have demonstrated the ability to generate impressive performance with large asset bases despite the excruciating market conditions in 2011.

An environment such as this calls for an intellectual debate on not just the macro-economic factors and capital inflows that are re-shaping the Asian hedge fund industry, but also on the best ways forward for Asian managers to build sustainable, global brands out of Asia. Aptly enough, the AsiaHedge Forum 2012, to be held in Hong Kong on 29 February and 1 March, will address these issues and more.

A wide cross-section of international investors will speak this year at the AsiaHedge Forum. They range from institutional investors such as DuPont Capital and Partners Capital to family offices and funds of funds such as Parey Company, Reyl & Cie, van Biema Value Partners, Mesirow, Larch Lane, Permal, Kairos and Gottex - we have a star-studded cast of global allocators that will highlight their plans for Asian investments in the years to come.

Hedge funds participating in the Forum this year include the likes of Millburn Ridgefield Corporation, LIM Advisors, Ortus, Samena Capital, Senrigan, Oracle Capital, Citic Securities International Investment Management, Phalanx Capital Management and Open Door.

We are also delighted to announce that Hon Professor K C Chan, secretary, financial services and the treasury for Hong Kong SAR, will be delivering a Special Government Address at the Forum. He is expected to touch upon the growth of Hong Kong as the capital for offshore renminbi products, among other things.

Indeed, a look at Asia today reveals that the region offers enough ammunition that will allow it to grow despite the risks and challenges being faced by Western economies. Growing domestic consumption and intra-regional trade and ties, combined with the fundamental soundness of most Asian economies and progressive measures such as the liberalisation of the renminbi, will throw up enormous opportunities for a newer generation of Asia-bred, cross-border/cross-asset class specialists among Asian hedge fund managers today. A case in point is a candid Q&A in this issue of AsiaHedge with Shirish Saraf, CEO and deputy chairman of Samena Capital, who talks about an innovative collective investment model to capitalise on these opportunities.

Finally, read a preview of major trends expected in areas of investments, asset raising, regulation and industry structure in the January issue of AsiaHedge. We wish all our readers a successful 2012 and look forward to seeing you all at the AsiaHedge Forum.

ISSN: 2151-1845 / CDC10004H