Singapore has always been something of an oddity. One of the world’s few remaining city-states, the country is far more developed than its neighbours and has long been a target for international capital, and international business. The country has, in the last twenty years or so, become one of the financial capitals of Asia, perhaps second only to Hong Kong.
Here’s a look at the hedge funds that have helped make that transformation possible, and others that resulted from it.
AR Capital Private Ltd
With a concentration on opportunities throughout Asia, AR Capital Private Ltd offers investors exposure to something they may lack, a good rounded view of the Asian equity markets. The company operates four major funds, the New Asia Fund, The Asia Select Fund, The Asia Focus Fund and the Asia (US) fund.
The fist three take on Asian stocks with a mix of strategies. The fourth, which was founded in 2012, is designed to accept investments in US dollars from clients inside the United States. The firm has seen some major success in those investments. Its New Asia Fund has gained a compounded annual growth rate of 14.8% since inception.
Aisling Analytics/RCMA Asset Management
What makes this company special is its commitment to commodities. CEO Michael Coleman has spent the majority of his career dealing in the physical trade and he brought that acumen to the hedge fund world, resulting in a company that’s not only able to trade paper and play the market, but also able to trade physical materials to play smaller-scale information inefficiencies in order to make a return.
Having just changed its name from Aisling to RCMA last year, many investors will miss a lot of history if they just look at the new company’s track record. The firm now deals in commodities across the board, from cotton to sugar. It’s not all been plain sailing for the company in recent years. Back in 2012 Coleman was forced to step back from everyday investment decisions after a numbing 30% loss.
One of the premiere quantitative hedge funds operating in Singapore today, Quantedge was founded in 2006 with just $3 million in capital, a number that has exploded in the years since. With annualized returns in the region of 30% realized since then, it’s clear to see why the company has managed to attract all that money.
The fund was described by Bloomberg as Asia’s best performing Macro hedge fund in 2014, in a story that marked its crossing of the $1 billion assets under management mark. The company’s offerings aren’t for the faint of heart, however. It ask investors to acknowledge and understand that it may lost up to 40% at times due to the volatility of the markets it deals in.
Set up by managers from Morgan Stanley and DBS Holdings, Cavenagh Capital set itself in Singapore in order to be close to the markets it concentrates on, the foreign exchange, derivatives and interest rate markets across Asia. Andrew Gale and Lee Ka Shao launched the fund in 2009 and, though it’s not made the big time just yet, it’s one to watch going forward.
The company reckons that the level of volatility through Asian money markets, stemming from the opacity of governance in the region, leads to real opportunities for those with greater analysis skills. Asymmetric payoffs in mispriced trades are the keywords the company uses to describe its strategy, and they have the experience to find those opportunities. Cavenagh Capital is certainly the most promising fund dealing with these kinds of instruments in Singapore, and it’s worth a look for any interested in the area.
Dymon Asia Capital
With a recorded return of 17% in 2014, Dymon Asia Capital is riding high. The company, which was founded with capital from Paul Tudor Jones, now has assets under management of around $3.5 billion, well ahead of the$113 million is originally granted to begin operations. The firm ended the year with the second-best track record in Asia and the tenth best in the world as a whole.
Last year, the hedge fund made its money from a big bet on the value of the yuan, China’s currency. The company follows a strategy of buying options that it reckons are cheap and waiting for them to play out, a strategy informed by the “black swan” approach to investments pioneered by Nassim Nichlas Taleb.
The firm will continue to try to take advantage of macro trends it sees coming according to its manager, Danny Yong. The manager says that macro cycles have shortened since the financial crisis and that violent corrections are becoming more commonplace. This makes long-term holdings more difficult to manage and offers rewards to more flexible traders.
Paul Shea is an experienced money, trading and investing writer who cut his teeth writing stock, investment and industry analysis and covering macroeconomics. Paul Shea work has been linked and quoted by MSNBC, BusinessWeek, Barrons, Zerohedge and The Blaze, and his work appears regularly on Google News and Google Finance, as well as other prominent news aggregators. He’s also written about the tech industry for the likes of Valuewalk and The Street. Paul is a senior contributor writer for TradersDNA and HedgeThink.