opalesque new managers feb 2012

8/2/2019 Opalesque New Managers Feb 2012

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New Managers | Opeqe Eme Me Moo 1

ISSUE 02 February 2012

Opalesques Emerging Manager Monitor ISSUE 01 September 2011



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In this issue of New Managers, Opa-

esques monthy monitor of emerging

managers, we see how Opaesques veryown Emanagers Tota Index gained 2.72%

in January 2012.

Our in-house number runher Peter Ur-

bani then expains how emerging manag-

ers have outperformed sine 2007, have

kept pae with equities sine 2008, and how their universe ontains

signifiant non-beta reated soures of return.

In Fous, we ook at the state of the hedge fund industry in Asiawith data from we-known providers, and the trends among emerg-

ing managers and among investors who invest in them. Asia is quite a

haenging environment, just ike everywhere ese. Eiza lau of Syn-

ergy Fund Management, Jeroen Tieman of IMQubator, and Rihard

Harris of Port Sheter give their perspetives.

This is foowed by a Q&A, in whih Bryan K. Johnson, an experi -

ened aternative investments marketer, exposes the (many) demands

of marketing and asset raising.

launhes reapituates the reent maiden aunhes from ex-hedge

fund managers, from ex-bankers, as we as the aunhes of patforms

and seeding ventures. We aso ist a new entrants in Opaesques

Emerging Managers database.

Perspetives reounts reent anaysts findings reated to emerging

managers; did you know that emerging funds have a good hane of

raising assets from the $1 Biion cub?

And in Profies, three emerging hedge fund managers tak to Opa -

esque about their funds: craig James taks about voatiity in Asia and

his forthoming aunh; Sarah Bernett about her $1,000 hedge fundwhih started the year with a bang after a terribe 2011; and Gavin

Vorwerg and Mark Preston expain their Sub-Saharan fund and the

South Afrian market.

I hope New Managers wi be of benefit to you.

Do ontat me if you have any reated news.

Benedicte Gravrand

[email protected]

Benedicte Gravrand

Opaesque New Manager is edited byBenedicte Gravrand. Based inGeneva, Switzerand, Benedite aso writes exusive stories, speia reports,

o-edits Opaesques daiy hedge fund pubiation Aternative Market Brief-ing (AMB) and oasionay moderates Opaesque Roundtabes. Benedite is

perfety biingua (Frenh/Engish) and has ived in Paris, Geneva and london.She obtained a BA (Honours) in Phiosophy from the University of london,

worked in the pubishing setor, the hedge fund industry and then joined Opa-esque in 2007.

Peter Urbaniis the former cIO of Infiniti capita, a now defunt Hong Kong-based Fund of Funds group. Prior to that, he was Head of Quantitative Re-

searh for Infiniti, Head of Investment Strategy, Head of Portfoio Management,Head of Researh and Senior Portfoio Manager for number of buy-side firms.

He started out in stok-broking as an open outry foor trader in the ate 1980s.Some of his VBA ode was inuded in Kevin Dowds Measuring Market Risk

and he speiaises in Risk Management and Portfoio constrution.

Editorial
mailto:[email protected]:[email protected]


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Opaesque ltd., a eading provider of onine information servies to the

aternative investment industry, announed the estimated January and

updated 2011 year-end resuts for its series of indies traking emerg-

ing hedge fund and managed futures fund managers. Index aua -

tions are based on urrenty 303 funds isted in Opaesque Soutions

Emanagers database, the industrys ony database dediated exu-

sivey to fund management firms ess than 48 months od and with

assets under management of ess than $600 miion at the time of the

firms ineption.

The Emanagers Total Index, onsisting of both hedge funds and

managed futures funds, gained 2.72% in January after osing 1.6% in

2011. Sine ineption in January 2009, the index grew over 61%, out -

performing both the goba stok market and its hedge fund peers.

The positive January resut was generated by the returns of hedge

fund strategies, as the Emanagers Hedge Fund Index gained 3.97%

(-2.45% in 2011). Managed futures funds traked by the Emanagers

CTA Index gained 0.56% (+0.39% in 2011).

12-month roing voatiity of Emanagers hedge funds sighty inreaseddue to heavy performane swings in the seond haf of 2011 and Janu -

ary 2012. We auated a stok market beta of approximatey 50%,

ompared to 29% for the Eurekahedge Hedge Fund Index.

Emanagers managed futures strategies ontinued their trend of deiver-

ing truy unorreated returns, resuting in an equity market beta of ess

than 1%. As one of very few fund performane indies, the Emanagers

cTA Index aso finished the year 2011 in positive territory.

Emanagers Indices

Emanagers Total Index gains 2.72% in January after losing 1.6% in 2011


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Index Jan 2011 2011 2010 2009 Volatility Equity market beta

Emanagers Total Index 2.72 -1.60 18.73 34.51 6.50 34

Emanagers Hedge Fund Index 3.97 -2.45 17.07 37.59 9.62 50

Emanagers CTA Index 0.56 0.39 19.15 20.52 3.72 0.8

Eurekahedge Hedge Fund Index 2.10 -4.10 10.71 20.37 5.72 29

Newedge CTA Index 0.46 -4.45 9.26 -4.31 8.37 1.7

MSCI World 0.75 -7.61 9.40 27.07 18.33 100

Performance (in %), Volatility and Equity Market Beta (in %)

Emanagers Indices

- Forian Gudner, Opaesque Researh


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An anaysis of the funds ontained within the Opaesque Emerging

Managers Index shows the foowing:

te Opeqe Emanagers Tota Index has deivered ompound

average annua returns of just under 17% sine Jan 2007* and just

over 16% sine Jan 2009 post the 2008 risis period. This post-

risis period return is in ine with the just under+16% from Equities

and very substantiay higher than that of a of the omparativeHedge Fund benhmarks.

In the wake of the 2008 risis period we saw a pethora of new aternative investment

strutures aunhed to meet the inreased demands for iquidity and transpareny. These

inuded the inreasing popuarity of various Managed Aount patforms, Newits (UcITS

III ompiant) funds and even a number of US At40 Aternative ETFs.

Three years down the trak we an say that at this stage the aggregate returns of these

newer vehies have been disappointing with Managed Aounts averaging +2.76%,

Newits +2.37% and Fund of Funds +3.03%. It is worth noting that Bonds returned+5.66% p.a. over this period. The broader stand aone Hedge Fund universe returned a

respetabe +8.8%.

If one ooks at the onger 4 year history from 2007 then you an see why Funds of Funds

in partiuar are ontinuing to strugge as fuy 50% of them remain beow their high water

marks and are not abe to earn performane fees. Equities have aso yet to reoup a of

their 2007 2008 osses.

*based on a statistia bakfi for period prior to Jan 2009

Emerging Managers outperform strongly since

2007 keep pace with Equities post 2008

Emerging Managers: Statistics

Cumulative Returns of Emanagers versus Alternative Asset Wrappers

and Traditional Asset Classes post 2008

-30.0

-10.0

10.0

30.0

50.0

70.0

90.0

Dec

-08

Feb-

09

Apr

-09

Jun-09

Aug

-09

Oct

-09

Dec

-09

Feb-

10

Apr

-10

Jun-10

Aug

-10

Oct

-10

Dec-10

Feb-

11

Apr

-11

Jun-11

Aug-11

Oct

-11

Dec-11

Cash CAGR: +0.45%

Bonds CAGR: +5.66%

Equities CAGR: +15.58%

Fund of Funds CAGR: +3.03%

Managed Accounts CAGR: +2.76%

Newcits CAGR: +2.37%

Hedge Funds CAGR: +8.80%

Emerging Managers CAGR: +16.27%

Cumulative Returns of Emanagers versus Alternative Asset Wrappers

and Traditional Asset Classes

-60.0

-40.0

-20.0

0.0

20.0

40.0

60.0

80.0

100.0

120.0

Dec-07

Mar

-08

Jun-08

Sep-08

Dec-08

Mar

-09

Jun-09

Sep-09

Dec-09

Mar

-10

Jun-10

Sep-10

Dec-10

Mar

-11

Jun-11

Sep-11

Dec-11

Cash CAGR: +1.03%

Bonds CAGR: +6.22%

Equities CAGR: -3.42%

Fund of Funds CAGR: -3.41%

Managed Accounts CAGR: -0.07%

Newcits CAGR: -0.15%

Hedge Funds CAGR: +0.27%

Emerging Managers CAGR: +16.89%

Statistical Backfill

Peter Urbani
http://www.opalesquesolutions.com/emanagers/commentary/5/Emanagers-Total-Index-gains-in-January-after5.htmlhttp://www.opalesquesolutions.com/emanagers/commentary/5/Emanagers-Total-Index-gains-in-January-after5.html


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ISSUE 02 February 2012Emerging Managers: Statistics

One of the main diffiuties in anaysing hedge funds is the pauity of information

about what they atuay own. This ak of transpareny has spawned many

innovations to the famiy of returns based stye anaysis modes first proposed by

Wiiam Sharpe (1992).

In addition to the widey used 3 Fator Mode of Fama & Frenh (1993) whih

takes the genera form of:

Additiona fators suh as carharts (1997), winners minus osers (WMl)

momentum fator have been added. Wiiam Fung & David A. Hsieh (2001, 2004)

aso proposed the addition of Primitive Trading Strategies to better repiate the

non-inear attributes of Hedge Funds. Other ontributions were made by capoi

(2005) and Hasanhodzi and lo (2006).

A of these innovations are aimed at better expaining the soures of

variane within a fund or hedge funds and in genera in improving the goodnessof fit of the mode as denoted by its R squared. Numerous issues surrounding

the hoie of fators, anaysis period and mutioinearity exist. An important

ontribution in this regard was made by Angeo loboso and Dan DiBartoomeo

(1997) with their paper on Approximating the confidene Intervas for Sharpe

Stye Weights.

In genera the more parsimonious the mode, the better, but additiona

fators may be warranted under some irumstanes.

Emerging Managers Universe contains significant

non beta related sources of return
http://www.stanford.edu/~wfsharpe/art/sa/sa.htmhttp://mba.tuck.dartmouth.edu/pages/faculty/ken.french/data_library.htmlhttp://faculty.fuqua.duke.edu/~dah7/HFRFData.htmhttp://www.opalesque.com/files/Thesis.pdfhttp://jasminah.com/http://www.northinfo.com/documents/51.pdfhttp://www.northinfo.com/documents/51.pdfhttp://jasminah.com/http://www.opalesque.com/files/Thesis.pdfhttp://faculty.fuqua.duke.edu/~dah7/HFRFData.htmhttp://mba.tuck.dartmouth.edu/pages/faculty/ken.french/data_library.htmlhttp://www.stanford.edu/~wfsharpe/art/sa/sa.htm


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Other more advaned methods suh as Prinipa component Anaysis

(PcA) and Independent component Anaysis (IcA) exist and an be

used to infer more about the makeup of funds. Whist these statistiamodes are more sophistiated they have the partiuar probem of

generating fators that are not as easiy open to interpretation as are

the maro and fundamenta fators typiay used.

We onduted a basi Stye Anaysis on the Eme Me

database, using most of the fators referred to in the iterature with the

exeption of Fung and Hseis PTS fators whih were not avaiabe.

The liquidity Fator of Pastor and Stambaugh (2003)was aso not

avaiabe for the fu period.

For the most reent 12 month period ( caendar 2011 ) the 16 Fator

mode we onstruted whih is simiar to that of capoi was abe to

(statistiay) expain most of the variane attributabe to the EmergingManager funds universe. The 16 fator mode ahieved an R Squared

of 68% versus 64% for the capoi mode and just 39% for the 4

fator Fama, Frenh and carhart mode. The additiona fators are thus

( statistiay ) abe to expain more of the variane of these funds.

We then ompared the average fator weights for the most reent 12

month period with those of some speifi fund and benhmarks, in

partiuar the Emerging manager Index, EM cTA, EM HF, Eurekahedge

HFI and Eurekahedge cTA indies.


The tabe on the eft shows the EmergingManagers Index to have ess Equity Market

exposure than the EM HF Index (whih

makes sense sine it ontains funds from

both the HF and cTA indexes) but more

Market exposure than the Eurekahedge HFI.

The Emerging Managers appear to have

more exposure to curreny (USD TWX).

The Emerging cTAs appear to have

ess exposure to God and Stye thanthe Eurekahedge cTA Index, and more

emphasis on FX and Govt credits than the

Eurekahedge cTA Index.
http://www.opalesquesolutions.com/emanagers/2182/index.phphttp://www.opalesquesolutions.com/emanagers/2182/index.phphttp://faculty.chicagobooth.edu/lubos.pastor/research/http://faculty.chicagobooth.edu/lubos.pastor/research/http://www.opalesquesolutions.com/emanagers/2182/index.phphttp://www.opalesquesolutions.com/emanagers/2182/index.php


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Average All Funds

EM Total IndexMarket

Size

StyleMomentum

Cash

Gold

Commodities

Oil

Intra Month Vol

VIX

USD - TWX

1/(USD/EUR)

Corporate Credit Spread

Slope of Yield Curve

Credit Spread

Emerging Mkt

EM HF

Eurekahedge HFI

Market

Size

Style

Momentum

Cash

Gold

CommoditiesOil

Intra Month Vol

VIX

USD - TWX

1/(USD/EUR)



Credit Spread

Emerging Mkt

EM CTA

Eurekahedge CTA

HFI

Market

Size

Style

Momentum

Cash

Gold

Commodities

Oil

Intra Month Vol

VIX

USD - TWX

1/(USD/EUR)



Credit Spread

Emerging Mkt

The surrounding doughnut harts show the most reent 12m fator

weight reative to their respetive benhmarks.

The harts on the foowing page show the 12m roing stye weights

as we as the ine hart of the stye index for eah fund/index. As

you an see the 16 fator mode used an better expain the vari -

ane of the two Eurekahedge Indies than that of the EmergingManagers Index athough the R squared is high in a ases. This

suggests that the Emerging Managers have aess to otherwise

un-expained soures of potentia apha. Another possibe interpre -

tation is the potentia use of everage.

- Peter Urbani



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60.00

70.00

80.00

90.00

100.00

110.00

120.00

130.00

140.00

150.00

Dec-08

Feb-09

Apr-09

Jun-09

Aug-09

Oct-09

Dec-09

Feb-

10

Apr-10

Jun-10

Aug-10

Oct-10

Dec-10

Feb-

11

Apr-1

1

Jun-11

Aug-11

Oct-

11

Dec-11

Eurekahedge Hedge Fund Index Style Index

60

70

80

90

100

110

120

130

Dec-09

Feb-

10

Apr-10

Jun-10

Aug-10

Oct-10

Dec-10

Feb-

11

Apr-1

1

Jun-11

Aug-11

Oct-11

Dec-11

Emanagers Total Index Style Index

60.00

70.00

80.00

90.00

100.00

110.00

120.00

130.00

Dec-0

8

Mar-09

Jun-09

Sep-09

Dec-0

9

Mar-10

Jun-10

Sep-10

Dec-1

0

Mar-11

Jun-11

Sep-11

Dec-1

1

Eurekahedge CTA/Managed Futures Hedge Fund Index

Style Index

12 Month Rolling Style Analysis for Eurekahedge CTA/Managed Futures Hedge Fund Index

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Dec

-08

Feb-

09

Apr-09

Jun-09

Aug-09

Oct-

09

Dec

-09

Feb-

10

Apr-10

Jun-10

Aug-10

Oct-

10

Dec

-10

Feb-

11

Apr-11

Jun-11

Aug-11

Oct-

11

Dec

-11


Credit Spread


1/(USD/EUR)USD - TWX

VIX

Intra Month Vol

Cash

Momentum

Style

Size

Market

Emerging Mkt

Oil

Gold

Commodities

12 Month Rolling Style Analysis for Eurekahedge Hedge Fund Index

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Dec

-08

Feb-

09

Apr-0

9

Jun-09

Aug-09

Oct-09

Dec

-09

Feb-

10

Apr-1

0

Jun-10

Aug-10

Oct-10

Dec

-10

Feb-

11

Apr-1

1

Jun-11

Aug-11

Oct-11

Dec

-11


Credit Spread

Corporate Credit Spread1/(USD/EUR)

USD - TWX

VIX

Intra Month Vol

Cash

Momentum

Style

Size

Market

Emerging Mkt

Oil

Gold

Commodities

12 Month Rolling Style Analysis for Emanagers Total Inde x

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Dec-09

Jan-10

Feb-10

Mar-10

Apr-10

May-10

Jun-10

Jul-10

Aug-10

Sep-10

Oct-10

Nov-10

Dec-10

Jan-11

Feb-11

Mar-11

Apr-11

May-11

Jun-11

Jul-11

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11


Credit SpreadCorporate Credit Spread

1/(USD/EUR)

USD - TWX

VIX

Intra Month Vol

Cash

Momentum

Style

Size

Market

Emerging Mkt

Oil

Gold

Commodities



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Emerging Managers: StatisticsPearson and Best Fit (Bivariate Copula) Correlations


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- Peter

Emerging Managers: StatisticsThe Tabe on the left shows the

average stye weights by fator for

a funds in the Eme Me

Database for the past 12 months.

It aso shows the R Squared for

eah mode.

Bear in mind that these sort of

modes are an indiation ony and

highy suseptibe to GIGO.

There is no substitute for rea

inteigene about the underyinghodings of a fund and these sorts

of Statistia measures shoud at

best be used as a point of depar-

ture for further disussion with the

manager.
http://www.opalesquesolutions.com/emanagers/index.phphttp://www.opalesquesolutions.com/emanagers/index.phphttp://www.opalesquesolutions.com/emanagers/index.phphttp://www.opalesquesolutions.com/emanagers/index.php


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ISSUE 02 February 2012Focus

i mo e of NewManagers (p.26), we mentioned a Preqin

survey that aimed that Asian investors are not as shy as their Western

ounterparts when it omes to investing in new hedge fund managers.

Indeed, 58% of investors in the region are apparenty prepared to invest

in new funds, ompared to 39% of European investors and 48% in North

Ameria. Asian investors were generay ess affeted by the downturn than

those based esewhere, whih oud expain their ontinued, and indeed

inreased onfidene in suh funds, said Preqin, a provider of inteigene

on the aternative assets industry.

Opaesque did some further investigation into the matter of Asian

investors, new managers of Asia funds (internationa and Asia-based), and

internationa investors in Asia funds.

The first impression was that, Asia-foused hedge funds did just as we

if not better at times as their other geographia ounterparts, and a ot of

internationa payers are either setting up Asia funds or are investing in Asia

funds to take advantage of the regiona opportunities.

Asian investors themseves, however, do not invest so muh in Asia hedgefunds as they have more of a trader-ike approah and prefer investing

short term either direty or through domesti funds usuay ong-ony

funds, to ride on the bu market. The environment is good enough for that

despite the high voatiity. Athough weathy chinese investors are now

turning to sunshine private trusts (chinese version of hedge funds) as the

property market oos, stoks sump and bank-deposit rates fai to math

infation, aording to Boomberg.

If they invest in internationa hedge funds, it is for diversifiation purpose.

So the main buk of apita oming to Asia-based and Asia-foused hedge

funds usuay omes from the internationa ommunity, espeiay from

Europe and North Ameria.

Asian hedge fund industry: current status quo

Apparenty, Asian hedge funds outperformed regiona voatie markets

in 2011 for the seond year in a row. Aording to HFR (Hedge FundResearh, In.), a chiago-based hedge fund data provider, in a year

marked by a diffiut ye of navigating steep equity market deines in

Japan and Emerging Asia, the HFRX Asia with Japan Index ended 2011

with a deine of -5.2%, mirroring the performane of the broad-based

HFRI Fund Weighted composite Index (-4.8%) and topping the Nikkei 225

and the Shanghai composite Index by 1,200 and neary 1,700 basis points

(bps), respetivey.

The worst reord was for china ong/short funds whih dropped around

17%, whie the MScI china index was down around 20%, said teFinania Times. That disappointing performane party refets the

diffiuty to short individua shares in china itsef, whie shorting the indies

an be risky.

As for the more genera HFRX Asia composite Hedge Fund Index, it ost

9.22% in 2011, after gaining 10.50% in 2010 and +16.80% in 2009. The

a-enompassing HFRX Goba Hedge Fund Index did sighty better ast

When launching an Asia hedge fund, expect a budding but crowed space
http://www.opalesque.com/NM2/Newsletter_NM_01242012.htmlhttp://www.preqin.com/docs/press/Dec_HFSL.pdfhttp://www.businessweek.com/news/2012-02-14/china-sunshine-funds-miss-hedge-slump-to-triple-assets.htmlhttp://www.bloomberg.com/quote/NKY:INDhttp://www.bloomberg.com/quote/SHCOMP:INDhttp://www.ft.com/intl/cms/s/0/23e410bc-2be5-11e1-98bc-00144feabdc0.html#axzz1jAsdTDDBhttp://www.ft.com/intl/cms/s/0/23e410bc-2be5-11e1-98bc-00144feabdc0.html#axzz1jAsdTDDBhttps://www.hedgefundresearch.com/hfrx_reg/index.php?fuse=login_bdhttps://www.hedgefundresearch.com/hfrx_reg/index.php?fuse=login_bdhttp://www.ft.com/intl/cms/s/0/23e410bc-2be5-11e1-98bc-00144feabdc0.html#axzz1jAsdTDDBhttp://www.ft.com/intl/cms/s/0/23e410bc-2be5-11e1-98bc-00144feabdc0.html#axzz1jAsdTDDBhttp://www.bloomberg.com/quote/SHCOMP:INDhttp://www.bloomberg.com/quote/NKY:INDhttp://www.businessweek.com/news/2012-02-14/china-sunshine-funds-miss-hedge-slump-to-triple-assets.htmlhttp://www.preqin.com/docs/press/Dec_HFSL.pdfhttp://www.opalesque.com/NM2/Newsletter_NM_01242012.html


15/37



year when it ost 8.8%, but not as we the previous years as it was up

5.19% in 2010 and 13.40% in 2009.

In 2011, says HFR, Asian hedge funds reeived infows of $6.6bn, a 7.5%

inrease in tota assets under management (AuM), bringing tota estimated

apita in Asian hedge funds to $82.1bn. contrary to trends aross the

goba hedge fund industry, two-thirds of the new apita invested in Asian

hedge funds in 2011 went to equity hedge strategies, foowed by event

driven and reative vaue arbitrage.

HFR estimates the number of Asian hedge funds to be at 1,100 at the

end of 2011 (up 4% for the year). The number of funds hoosing to oate

in Asia aso went up for the year, with china, Singapore and Austraia a

showing inreases, whie the number oated in the US deined. Asian-

foused hedge funds oated in china inreased in number by 28% in H2-

2011 for exampe.

When bearing in mind the survivorship bias that is inherent in numbers

given by data providers, these numbers sti dont ook too bad.

Aording to Eurekahedge, a Singapore-based hedge fund data provider,

there are 680 Asia-based hedge funds in existene.

There might have been a aunh fatigue in 2011, whih saw ess of them

than in 2008. Eurekahedge tod Opaesque that 124 Asia-based hedge

funds were aunhed in 2007; 96 in 2008; 121 in 2009; 114 in 2010; and 83

in 2011. And 130 of the Asia-based hedge funds that aunhed between

2008 and 2011 have osed down amost a quarter of them.

Otherwise, 123 Asian hedge funds osed in the first 10 months of 2011,

ompared with 125 in 2010, and 184 in 2008. Hedge funds in the region

manage $125bn, ompared to $176bn in 2007, aording to Eurekahedge.

As an be seen from the harts beow, the favorite strategies bak in 2007

were muti-strategy and event driven. In 2011, it was ong/short equity.

Emerging hedge funds started with AuM of $26.5m on average in 2007,

and $13m on average in 2011.

ao aording to BNY Meons aternative investment servies in Asia,

Asia-based hedge funds are inreasing in size due to better governane,

and the average size of a fund aunh in 2011 was the same as Europe, at

around $40m.

And unsurprisingy, most start-ups sine 2007 have been setting up their

head offie either in Hong Kong or in Singapore.

Focus

CTA/ManagedFutures, 5.1, 3%

Event Driven, 30.5,19%

Long Short Equities,13.7, 9%

Macro, 21.7, 14%

Multi-Strategy, 73.1,46%

Others, 15.1, 9%

Asia-based hedge fund launches bystrategy and starting AuM($ million) - 2007

Data Soure: Eurekahedge
http://www.opalesque.com/IndustryUpdates/2343/Asian_hedge_funds_top_equity_markets_again_in234.htmlhttp://www.eurekahedge.com/http://www.hedgefundsreview.com/hedge-funds-review/news/2137768/asian-hedge-fund-size-increasing-managers-embrace-corporate-governancehttp://www.hedgefundsreview.com/hedge-funds-review/news/2137768/asian-hedge-fund-size-increasing-managers-embrace-corporate-governancehttp://www.eurekahedge.com/http://www.opalesque.com/IndustryUpdates/2343/Asian_hedge_funds_top_equity_markets_again_in234.html


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Hedge fund seeders expect more talent coming out ofAsia

Eiza lau, founder and cIO of newy formed Hong Kongbased muti-manager firm Synergy Fund Management (SFM), and former cEO and cIO

of fund of hedge funds house SAIl Advisors, and Jeroen Tieman, cEO

and founder of Duth-based seeding patform IMQubator reenty formed

pep, whih entais souring and seeding Asia-Paifi hedge fund

managers. They taked to Opaesque about what they have observed

among investors and fund managers in the region.

Eiza lau is seeing quite a bit of interest in od and new Asian hedge funds

oming from the major asset aoators. These asset aoators, she says,

have not been investing in Asia muh sine the 2008 redit risis. Some

did not even aoate a penny in the region. But they are starting to investin Asia again now, espeiay pension funds from Europe, from Japan and

esewhere. They are seeing that Asia is eary a growth engine.

As for chinese investors, most invest domestiay, she says. But due to

the weath aumuating effet, they are ooking to expand their produts

range out of china-foused funds. Now, domesti investors, institutions,

and asset management firms are oming out of china to ook for

produts.

Focus


Arbitrage, 8.5, 8%

CTA/ManagedFutures, 13.4,

13%

Event Driven, 11.6,11%

Fixed Income, 11.8,11%

Long Short Equities,

37.1, 36%

Macro, 12, 12%

Multi-Strategy, 2.9, 3%

Relative Value, 6.7,6%

Asia-based hedge fund launches by strategy andstarting AuM ($ million) - 2011

# of launches

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

HongKo

ng

Singapo

re

Austra

lia

Japa

n

Chin

a

New

Zealand

SriLanka

Mauritius

India

SouthKorea

Thailand

Malaysia

Indonesia

Taiwan


Breakdown by head-ofce location of Asia-based hedge

fund launches since 2007
http://www.opalesque.com/fullarticle/640144/IMQubator_and_Synergy_partner_to_seed_managers014.htmlhttp://www.opalesque.com/fullarticle/640144/IMQubator_and_Synergy_partner_to_seed_managers014.htmlhttp://www.opalesque.com/fullarticle/640144/IMQubator_and_Synergy_partner_to_seed_managers014.htmlhttp://www.opalesque.com/fullarticle/640144/IMQubator_and_Synergy_partner_to_seed_managers014.html


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Asian institutions are more onservative and wi

tend to stik to estabished funds. But famiy offies

and asset management firms definitey have moreappetite for start-ups. But it is not a big probem for

the atter. If they are seeded at an eary stage (by the

ikes of Synergy and IMQubator for exampe), and their

performane is satisfatory after 6 to 9 months, arge

chinese and Japanese investors wi be more open to

them, she expains. The good names have been abe

to attrat anything from $20m to $500m in 18 months from pensions,

institutions and famiy offies.

The probem that emerging managers have to dea with whether in Asia oresewhere, Tieman notes, is the herd behaviour among investors.

Remember aso that fund managers based in Asia

do not a neessariy fous their investments on Asia

ony, and not a are of Asian nationaity, he points out.

Top taent is not geography-bound. We, as inubators,

have seen a ot of appiations from Europe, but aso an

inreasing amount from Asia. And if we want to expose

ourseves to emerging managers, it is neessary to

inude Asia.

Aording to data ompied by Synergy, the tota number of funds in Asia

is 1,315, with tota AuM of $131bn.

lau is onfident there wi be more start-ups in Asia, with more taented

managers.

In the past, many of the oa chinese fund managers foused on

domesti markets; they were not trading with foreigners, she expains.

The china market has been opening up. For exampe, the shortabe istgrew from ess than 50 names two years ago to now about 281 names.

This is the ong/short side.

The other side of it is in ommodities. There is a very ative ommodity

futures exhange, whih domesti managers have been trading in.

Outside foreigners may not neessariy be abe to hedge there.

We have been heping some taented chinese fund managers set up

offshore funds in Hong Kong or in Singapore, or a cayman fund struture.

Jeroens expertise is very hepfu there as we.

Fund managers in the region have been abe to do some shorting for

some time now. china is even panning to introdue a centraised

Seurities lending Exhange to faiitate short-seing, the Finania Times

reported in January, a move that wi push forward its nasent hedge fund

industry.

commodity trading is urrenty one of the favourite ativities among

managers, as the market is demanding agriuture and energy. lau

expets the equity market wi be aso interesting. Given the marketvoatiity, chinas market has orreted hugey in the ast two years, she

expained. So I am expeting to see is ower vauation and the infation

to be under ontro, as we as iquidity easing oming sowy from the

chinese government. With the ongoing voatiity, equity ong/short, high

frequeny trading, and market neutra strategies may perform better than

their ong-biased peers, for the china and the Japan markets.

Focus

Jeoe tem

Eiza lau
http://www.reuters.com/article/2012/01/05/china-shortselling-idUSL3E8C50C920120105http://www.reuters.com/article/2012/01/05/china-shortselling-idUSL3E8C50C920120105


18/37



(See our atest 3-part series on china hedge funds here, and a reent

interview of Jeroen Tieman o Opeqe tv ee).

Better to launch in two years time

Rihard Harris, a finane veteran who has ived 43 years in Asia, is the

founder of Po see, a newy formed onsutany and investment

management shop based in Hong Kong. Most previousy, Harris was cEO

of Quam Asset Management, a finania servies group in Hong Kong;

Managing Partner at Grae Finania, an independent muti-asset fund

manager; and Diretor/Head of Asset Aoation and Manager Seetion

at citigroup Private Bank. In an artie whih appeared Opeqe

January, he reas his 26-years experiene in the investment managementindustry and ompares it to todays. Opaesque aught up with him to ask

him what he had been observing among start-ups in Asia.

He sees the whoe industry going through a big hange at the moment.

Its ike Eonomis 101, he expains. If you have a few peope in the

industry that make a huge amount of money and some of the rihest

peope on the panet are urrenty hedge fund managers then of ourse,

every one is going to pie into the industry to foow them. Then margins

oapse.

Fund management ompanies are faing ike fies at the moment espeiay

in Asia, and have to eave the industry before margins an reover again,

he notes. As for investors, they have either deeveraged or have gone into

ash, so there is a ot ess avaiabe for investment.

He thinks there are too few (good) funds in the industry and too many fund

managers. Even more so within the Asian hedge fund industry. One of the

reasons for that is that china has been underperforming the Word index

for the ast two and a haf years. When markets underperform, then assets

eave.

te MScI Word Index posted a 2011 return of -8%, and +9.5% in 2010.

Emerging Markets ountries were aso substantiay impated by the 2011

sowdown: the MScI Emerging Markets Index showed a 2011 performane

of -20.6% versus a return of +16.4% in 2010. And theA china+Hong

Kong+Taiwan MScI index went down amost 19% in 2010-2011.

A seond reason, Rihard Harris ontinues, in Asia, there has been

a rise of fund managers, a ot of whom have not been abe raise ritia

amounts. There are reativey few managing between $300m and $500m.

There are a ot fewer [finania] produts than in london and New York.

As a resut, fund managers have a very imited means of going short, an

go short in fewer markets, and have fewer produts to hoose from. The

industry has a ot of very young fund managers (with often just five-year

trak reord), ombined with this shrinkage of assets.

Thats aso ombined with the fat that a ot of fund managers in Asia

have not been trained very we; a ot of them have been home-grown. I

am from the od shoo and got forma training. Now a ot of peope just

ome up and start to run money with very itte asset management training.That ombination means that a ot of houses out there dont have the

experiene to dea with diffiut situations.

In other words, the hedge fund industry in Asia is sti in its youth stage.

Harris beieves the hanes out there for new hedge fund managers are

in the negative at the moment. The best thing to do woud be to go on

hoiday for two years, he stated.

Focus
http://www.opalesque.com/638481/All_about_China_hedge_funds_How848.htmlhttp://www.opalesque.tv/hedge-fund-videos/Jeroen_Tielman/index.phphttp://portshelter.com/http://www.opalesque.com/640427/A_Very_Crowded_Trade042.htmlhttp://www.msci.com/resources/pressreleases/Press%20Release%20MSCI%20YTD%202011%20Performance.pdfhttp://www.msci.com/products/indices/performance.html?undefinedhttp://www.msci.com/products/indices/performance.html?undefinedhttp://www.msci.com/products/indices/performance.html?undefinedhttp://www.msci.com/products/indices/performance.html?undefinedhttp://www.msci.com/resources/pressreleases/Press%20Release%20MSCI%20YTD%202011%20Performance.pdfhttp://www.opalesque.com/640427/A_Very_Crowded_Trade042.htmlhttp://portshelter.com/http://www.opalesque.tv/hedge-fund-videos/Jeroen_Tielman/index.phphttp://www.opalesque.com/638481/All_about_China_hedge_funds_How848.html


19/37



But to those ompanies ooking to set up now, he woud reommend

gathering at east $100m before marketing, as investors are not interested

in sma funds, and beause one needs that kind of sum to run a reguator-ompiant and internationa-investor-ompiant fund management ompany.

Harris is not seeing many new start-ups in Asia right now and thinks that

those who are starting at this moment are just foowing a the emmings of

the iff. It is simpy not the right time beause assets are diffiut to ome

by; the domesti chinese asset management industry is overrowded; to

set up in Hong Kong, you need to have at east $100m in AuM; investors are

short-term and have no oyaty to the funds; many fund managers are not

very experiened; and institutiona poos of apita are muh smaer (there

is not reay a pension fund industry yet for exampe).

Pau Smith, cEO of Hong Kong-based asset manager Tripe A Partners

ltd is equay pessimisti. For smaer managers, its simpy a question

that they annot afford the opportunity ost of ontinuing, he reenty tod

Boomberg. I am pessimisti on asset raising. I ant see that things wi

improve. There is too muh goba unertainty whih keeps investors on the

sideines.

Harris aso reommends emerging fund managers to stik to a partiuar

theme or a partiuar fous. Investors ike that.

When he was at Quam, he set up the words ony iquid Mongoia fund

whih is sti going. He is onvined that he managed to aunh it beause

of the one-month iquidity term. Other funds that offered onger iquidity

terms did not aunh. Nobody is wiing to do more than one month and

thats the message I am getting out of Europe, and its the same in Asia

too.

He thinks it wi take about two years before this overrowding atuay

starts to go down.

Poos of apita are very private and very [fike], he sums up. There

arent a ot of investors and there are a ot of funds. And there arent many

veterans or estabished fund managers around.

- Benedite Gravrand

Focus
http://www.bloomberg.com/news/2012-01-04/asia-hedge-funds-face-a-year-of-attrition-after-most-closures-since-2008.htmlhttp://www.bloomberg.com/news/2012-01-04/asia-hedge-funds-face-a-year-of-attrition-after-most-closures-since-2008.html


20/37


ISSUE 02 February 2012Q&A

Aording to a reent white paper tited Marketing and Fundraising

For Sma Hedge Funds, it is getting harder, more expensive and

more ompex for sma and new hedge funds to grow assets under

management (AUM). No surprise there.

Without inteigent, omprehensive panning and preparation, a funds

attempt to grow AUM an be over before it begins, the paper says.

Suessfu marketing and fundraising requires numerous disussions

and panning sessions we in advane (optimay 4-6 months) of formay

engaging investors, intermediaries and market partiipants. The paper

then expains the steps to take.

The white paper was authored by Bryan K.

Johnson, managing partner of a marketing

onsutany shop based in Austin, Texas,

aed Johnson & company. The firm

speiaises in start-up and smaer hedge

funds. Johnson has more than 20 years ofexperiene in saes and marketing within

aternative investments and was asty

Goba Head of Business Deveopment,

Aternative Investments at Moodys

Investors Servie (NYc).

Opaesque put him to the test in a Q&A.

Question: Why and how should fund managers make the distinction

between marketing and asset raising?

Answer: Marketing and fundraising are distint but ompementary

ativities.

Marketing is ommuniation and shoud be a onsistent and ontinua

ativity, whie fundraising is ative soiitation of investors, whih shoud bea oordinated periodi and opportunisti ativity.

A fund shoud aways be in reguatory ompiant quaitative and

quantitative ommuniation with the various onstituents in its eo-

system (investors, intermediaries, servie providers, et.) to buid the

neessary reationships it may need through its maturation proess in

order to expedienty and effiienty aquire AUM, resoures, information

and inteigene. Many sma funds make the mistake of fundraising without

suffiient reationships and before they have appropriate information as

to the suitabiity of an investor as we as understanding of an investorsaoation proess aong with the degree of intermediation invoved. Trying

to irumvent that proess is an unwise deision partiuary in instanes

of intermediation. In addition, a fund needs to gain a eve of proess

onfidene with the investor.

Q. If smaller and emerging fund managers divert investing time to

conduct marketing, performance suffers, and marketing becomes less

If you want to do well, develop your marketing strategy 4 to 6 months before

starting active fundraising

Bryan Johnson
http://www.opalesque.com/files/JohnsonCompanyFALL2011WhitePaper.pdfhttp://www.opalesque.com/files/JohnsonCompanyFALL2011WhitePaper.pdfhttp://www.johnsn.com/Home_Page.phphttp://www.johnsn.com/Home_Page.phphttp://www.opalesque.com/files/JohnsonCompanyFALL2011WhitePaper.pdfhttp://www.opalesque.com/files/JohnsonCompanyFALL2011WhitePaper.pdf


21/37



efcient its a vicious circle. Have you seen that happen a lot?

A. Yes. Usuay this happens when a sma fund does not have a written

marketing pan. A sound marketing pan inudes appropriate aoation

of resoures in the way of time and money to strutured and disipined

investor outreah. Unfortunatey, most sma funds beieve marketing is

soey posting performane on databases and the aoation deision is a

one metri riteria: performane.

Q. Could you give me examples of when geopolitical and volatility

affect the asset raising environment?

A. Any issues that infuene unertainty and investor onfidene affet

marketing and fundraising. Among exampes woud be Madoff, the

redit risis, goba eonomi unertainty, unpreedented voatiity and

greater reguatory intervention. Suh issues are inreasing and hanging

exponentiay. However, as aways there is opportunity in risis. In fat,

when written in chinese, the word risis is omposed of two haraters.

One represents danger and the other opportunity.

For hedge funds, effetivey understanding geopoitia risk, hanges in

regimes, reguatory environment and attitudes, fisa poiy and orporate

governane, et., is a strategi and tatia imperative. Aso suh issuesan have positive and negative infuene on fundraising as a whoe as we

as by individua strategy. For exampe, goba maro is muh more sensitive

to geopoitia risk than perhaps a heathare ong/short fund. Moreover, a

fund that an demonstrate through its investment and enterprise proesses

the abiity to onsistenty manage and opportunistiay apitaize in suh

a imate is better positioned to raise as we as retain AUM through

heightened or sustained periods of suh risk.

Voatiity has substantiay inreased in the ast year or so argey as a resut

of geopoitia issues. Exaerbated voatiity inreases tai risk, events that

are both unforeseeabe and atastrophi, whih is undesirabe to say the

east and drives investors (iquidity) out of the market. However, investors

are now seeking out funds and strategies that have as an investment

proess the abiity to hedge as we as profit from tai risk events. Again

opportunity with risis.

Q. You say investors want to invest in managers they feel condent

in. To what extent is it a game of condence?

A. Its aways been a game of onfidene, however onfidene is now

heaviy derived from a funds proesses not pedigree as it one was.

After the redit risis, whih some oud a the faiure of pedigree,

investors have ome to reaize that apha is the resut of proess and

gaining onfidene in a funds enterprise-wide proesses is ritia to the

investment deision, whih expains the inrease in time and resoures

direted to proess assessment i.e. operationa due diigene.

Q. Do investors bear in mind that solid infrastructure is costly and

makes it difcult for small or emerging fund managers to survive? Or

are they uncompromising in general?

A. I dont see investors as unompromising. However, what I do see is

more invasive and protrated due diigene assessments as resut of fear,

inexperiene and proprietary proedures on the part of investors and some

onsutants. This expands the aoation ye and inreases the ost of

marketing.

In a, investors are attempting to prudenty meet their investment

Q&A


22/37



objetives and fiduiary responsibiities. In that regard, investors ativey

seek investment risk but aggressivey avoid operationa risk.

Moreover, business risk is for the entrepreneur not the investing ient.

Operating a hedge fund as a business is a risk. If a trader wants to trade

for his or her own aount and not aept outside money then minima

infrastruture is required as the ony apita at risk is persona. If a fund is in

business to manage individua weath or fiduiary assets then it must meet

the hurdes to do so. A finania institution, regardess of size, must operate

with appropriate doumented ontros, proedures and infrastruture if it

desires to aept and reeive externa soures of apita. Any ompromise

in that regard tends to onude with dire onsequenes as we have seen.

Q. Strong tactics are needed to market a fund. However most fund

managers do not know enough about that side of the business to

even start writing a plan. What is the best thing for them to do: partner

with a co-founder whose specialty is marketing and fund raising? Call

on a third party marketing rm (can they afford it)? Seek refuge in a

seeders platform?

A. As to whats best depends on the fund, its position in the maturation

proess and resoures. One of the areas that we ounse firms on is the

appropriate understanding of interna and externa professiona marketingresoures and their use. We onstrut a detaied map of the marketing

options and requirements for a fund in order to provide a reaisti

understanding of what they quaify for and what they an expet in order

to make informed deisions about marketing. For exampe, many funds

waste a great dea of time attempting to engage third party marketing for

whih they may not yet be suitabe. Muh in the same way many smaer

funds are frustrated by ap intro from prime brokers.

Q. One must identify the right investor segment. Can you give

examples?

A. Most sma funds do a poor job in tatia marketing: souring and

profiing suitabe, quaified and appropriate investors given their fund

profie. As suh, their efforts to grow AUM are highy ineffiient and

unsuessfu. The historia, ritiay important and most appropriate

investor segment for sma hedge funds (sub $250 miion in AUM) is private

weath: utra high-net worth individuas, famiies and singe/muti-famiy

offies.

However, many sma funds attempt to engage, inappropriatey so, sma

and arge institutiona investors. Sma institutiona investors (endowments,foundations, et.) generay aoate $5-$15 miion to the asset ass and

usuay fous on fund-of-funds (FoFs) to ahieve diversifiation, whie

arger institutions typiay seek to pae aoations of $25-$50 miion

on average in a diret investment. Suh arger diret aoations an ony

be aommodated by arge funds, usuay $250 miion AUM minimay,

that have an institutiona-quaity operationa infrastruture as we as

enabes arge investors to remain within their onentration imits by

not exeeding a ertain perentage of a funds AUM (usuay 5%-10%).

These requirements exude sma funds from institutiona marketing and

fundraising.

As an aside, FoFs, whih use to be a signifiant soure of apita for

smaer funds, are under tremendous strutura pressures and AUM is

down onsideraby. As suh, asset fow to sma funds from FoFs has

deined. A fund must be onstanty in searh of new soures of AUM as

we as retention of existing AUM. Investor base management is one area

where most sma funds underperform.

Q&A


23/37



Q. What do you recommend to managers whose hedge fund is less

than a year old?

A. Buid a trak reord, Buid reationships and Buid a business.

Then its a matter of saying to the right investors. Id ike you to keep

an eye on me and Im going to see that you do by proativey and

onsistenty engaging with you quantitativey and quaitativey over the

next year regardess of good and bad performane and voatie markets.

What does that ook ike? Aside from posting and providing performane

numbers, it means meeting with investors to tak with them about the

markets, their issues, onerns and performane, your funds proess

and most ritiay, how your proess deas with the primary goa of aninvestor: onsistent absoute performane and the primary onern of an

investor: risk.

Q. What do you recommend to those who have not started yet but are

thinking of setting up a fund? Should they plan their marketing now?

A. A funds are aware of the ega, aounting, administration and

tehnoogy servie investments they must make to operate a fund but few

ompetey understand the investment in marketing required. Suessfu

marketing requires investments beyond passivey isting on popuardatabases.

candidy, regardess of size, investing in marketing is mission ritia for

a hedge fund. When asked to desribe apha generation a funds tak

about proess, whih requires investment in skied human resoures,

systems and doumented proedures. However, the vast majority of

funds approah marketing as an event and fai to make the neessary

investments to ahieve suess. Marketing is a proess, whih

requires the same degree of thought, struture, panning, disipine and

onsisteny as investing or trading.

We generay advise that for optimum suess a marketing strategy

be deveoped 4-6 months before aunhing a forma investor outreah

ampaign and ative fundraising.

- Benedite Gravrand

Q&A


24/37



Now we see a ot of aunhes from peope oming out of hedge funds

where they have run estabished funds or part of the portfoio in a hedge

fund format, lisa Fridman, head of European Researh at Paifi

Aternative Asset Management company (PAAMco), whih invests in start-

up funds, tod city A.M.

We recently heard of the following ex-hedgefunders striking out on their own:

1. Ex-Gartmore manager Guiaume Rambourg started Verrazzano capitain Paris in January with $500m; he is to aunh two European ong/

short funds with baking from former o-manager Roger Guy;

2. Thierry luas, formery at Eton Park capita Management, is to aunh

Portand Hi capita in london with $500m for an event-driven and

equity ong-short fund;

3. Emerging markets-foused Faon Edge capita, set up in New

York and london by ex-Bue Ridge capita and ex-Eton Park capita

traders, is apparenty about to start trading;

4. Former FrontPoint portfoio manager John Foo and three former

oeagues are reviving Kingsmead whih he set up in 2008 and

wi aunh an Asia-foused hedge fund with about $50m in Marh in

spoe;

5. Former Sparx Asia Investment Advisors manager Dary Fint

estabished Doube Haven capita in Otober 2011 and aunhed in

January 2012 a ong/short hedge fund with $20m of prinipa apita;

6. Jeff lignei, previousy at Appaoosa Management, started hedge fund

firm Inine Goba Management with seeding from Appaoosas

founder David Tepper;

7. Steve Aperin and Sara Feiss, previousy of Harvard Management

company, set up a hedge fund firm in Boston, Eme Pe, and wi

aunh an event-driven voatiity arbitrage fund in Q3;

8. Ex-Soros Fund Managements Betsy Batte, now cIO of lone Peak

Partners, a funds of hedge funds house, aunhed a new hedge fund

firm, lPP linden, l.P. with $100m.

9. Phiippe goeem, former Managing Diretor and Head of Hedge

Funds at Unigestion, wi aunh a iquid goba maro hedge fund

aed the Gasnost fund Je;

10. Wiiam Boinger, former head of Egerton capita, ame out ofretirement to aunh a new hedge fund venture, Judio capita, in

spoe;

11. Ex-Martin currie Investment Management exeutives chris Ruffe and

Ke Shifeng founded Ope doo cp gop, a $400m Shanghai and

San Franiso-based asset manager, and wi aunh a china hedge

fund in Marh.

Lots of launches from people coming out of hedge funds

Launches
http://www.cityam.com/latest-news/hedge-fund-managers-rush-set-new-firmshttp://www.businessweek.com/news/2011-10-05/former-gartmore-trader-rambourg-said-to-start-paris-hedge-fund.htmlhttp://www.opalesque.com/fullarticle/640774/Launches_Former_Gartmore_star_Rambourg_to_launch077.htmlhttp://www.opalesque.com/fullarticle/640774/Launches_Former_Gartmore_star_Rambourg_to_launch077.htmlhttp://www.hedgefundintelligence.com/Article/2966882/News/Eton-Park-vet-Lucas-gears-up-for-Portland-Hill-launch.htmlhttp://www.opalesque.com/fullarticle/639164/Launches_RidgeEton_Park_team_set916.htmlhttp://www.reuters.com/article/2012/01/05/uk-hedgefund-kingsmead-idUSLNE80400I20120105http://www.hfmweek.com/news/1703982/double-haven-launches-asiapacific-focused-fund.thtmlhttp://newyork.citybizlist.com/18/2012/1/26/Tepper-to-Back-Jeff-Lignellis-Incline-Hedge-Fund.aspxhttp://www.opalesque.com/fullarticle/640710/Launches_Stanley_Asia_head_Ranodeb071.htmlhttp://newyork.citybizlist.com/18/2012/1/24/Soros-Fund-Veteran-Betsy-Battle%E2%80%99s-Lone-Peak-Partners-Raises-100M--cbl.aspxhttp://www.opalesque.com/639906/Unigestion_Head_of_Hedge_Funds_leaves_to990.htmlhttp://www.opalesque.com/fullarticle/640406/Launches_Hedge_Fund_Managers_Rush_to_Set040.htmlhttp://www.opalesque.com/fullarticle/640735/Launches_Hedge_fund_pioneer_William_Bollinger_back073.htmlhttp://www.opalesque.com/fullarticle/640735/Launches_Hedge_fund_pioneer_William_Bollinger_back073.htmlhttp://www.opalesque.com/fullarticle/640735/Launches_Hedge_fund_pioneer_William_Bollinger_back073.htmlhttp://www.opalesque.com/fullarticle/640735/Launches_Hedge_fund_pioneer_William_Bollinger_back073.htmlhttp://www.opalesque.com/fullarticle/640406/Launches_Hedge_Fund_Managers_Rush_to_Set040.htmlhttp://www.opalesque.com/639906/Unigestion_Head_of_Hedge_Funds_leaves_to990.htmlhttp://newyork.citybizlist.com/18/2012/1/24/Soros-Fund-Veteran-Betsy-Battle%E2%80%99s-Lone-Peak-Partners-Raises-100M--cbl.aspxhttp://www.opalesque.com/fullarticle/640710/Launches_Stanley_Asia_head_Ranodeb071.htmlhttp://newyork.citybizlist.com/18/2012/1/26/Tepper-to-Back-Jeff-Lignellis-Incline-Hedge-Fund.aspxhttp://www.hfmweek.com/news/1703982/double-haven-launches-asiapacific-focused-fund.thtmlhttp://www.reuters.com/article/2012/01/05/uk-hedgefund-kingsmead-idUSLNE80400I20120105http://www.opalesque.com/fullarticle/639164/Launches_RidgeEton_Park_team_set916.htmlhttp://www.hedgefundintelligence.com/Article/2966882/News/Eton-Park-vet-Lucas-gears-up-for-Portland-Hill-launch.htmlhttp://www.opalesque.com/fullarticle/640774/Launches_Former_Gartmore_star_Rambourg_to_launch077.htmlhttp://www.opalesque.com/fullarticle/640774/Launches_Former_Gartmore_star_Rambourg_to_launch077.htmlhttp://www.businessweek.com/news/2011-10-05/former-gartmore-trader-rambourg-said-to-start-paris-hedge-fund.htmlhttp://www.cityam.com/latest-news/hedge-fund-managers-rush-set-new-firms


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Among former bankers:

12. Todd Edgar, former goba head of maro trading at Barays P in

london, is starting hedge fundae cp llc in May with a few

former oeagues;

13. Sutesh Sharma, one of citigroups senior proprietary traders,

registered a new firm, Pom sqe cp, in the UK ast year and

is expeted to aunh a fund soon (cop shut down its proprietary-

trading desk and most of the desk staff were supposed to eave the

bank this month);

14. Morgan Staneys former head of fixed inome for Asia-Paifi,

Ranodeb Roy, and Vikram Mangagiri, a former adviser at Paifi

Investment Management co started RV capita Management Pvt and

wi aunh a hedge fund in Apri/May that wi fous on interest rates,

redit and foreign exhange.

Seeding ventures and platforms

There is a seeding frenzy in the hedge fund industry, deared the New

York Times in January: As the industrys returns have been disappointing,

big investors need somewhere to park their money and handing

deveopment apita to emerging hedge funds has beome a strategy of

hoie.

The atest seeding ventures and patforms being aunhed were:

15. Deutshe Bank and Finania Risk Management (FRM) partnered to

aunh the industrys first hedge fund seeding managed aount

patform.

16. cantor Fitzgerad, a goba investment bank, is venturing into hedge

fund seeding, joining an array of asset managers that seek to take

advantage of start-up firms diffiuty in raising apita, reported TheWSJ. The new seeding fund wi provide between $25m and $50m

start-up apita to 20 to 25 emerging fund managers.

17. Ader Investment Management (AIM) aunhed Aeerator Fund

Partners lP, a funding patform for hedge funds ooking to boost AuM

and enhane their distribution into famiy offies and fund of funds.

18. The HSBc Next Generation Fund, whih invests in new and upoming

hedge fund managers gobay and was started in September 2011,

aunhed High Net Worth and Institutiona share asses.

- Benedite Gravrand

Launches
http://www.opalesque.com/fullarticle/640503/Launches_Strategic_Value_said_to_raise050.htmlhttp://www.ft.com/intl/cms/s/0/f080c3c8-cc08-11e0-9176-00144feabdc0.html#axzz1mjc3WNXBhttp://www.bloomberg.com/news/2012-01-27/citigroup-says-most-proprietary-trading-employees-to-leave-as-desk-closed.htmlhttp://www.opalesque.com/fullarticle/640710/Launches_Stanley_Asia_head_Ranodeb071.htmlhttp://www.opalesque.com/fullarticle/640165/Seeders_Deutsche_Bank_and_FRM_partner_to016.htmlhttp://www.opalesque.com/fullarticle/640165/Seeders_Deutsche_Bank_and_FRM_partner_to016.htmlhttp://www.opalesque.com/fullarticle/640693/Cantor_Fitzgerald_plans_foray_into_hedge_fund_seeding069.htmlhttp://www.opalesque.com/fullarticle/640524/Launches_Ader_Investment_Management_launches_innovative_funding052.htmlhttp://www.opalesque.com/IndustryUpdates/2363/HSBC_starts_high_net_worth_and_institutional_share236.htmlhttp://www.opalesque.com/IndustryUpdates/2363/HSBC_starts_high_net_worth_and_institutional_share236.htmlhttp://www.opalesque.com/fullarticle/640524/Launches_Ader_Investment_Management_launches_innovative_funding052.htmlhttp://www.opalesque.com/fullarticle/640693/Cantor_Fitzgerald_plans_foray_into_hedge_fund_seeding069.htmlhttp://www.opalesque.com/fullarticle/640165/Seeders_Deutsche_Bank_and_FRM_partner_to016.htmlhttp://www.opalesque.com/fullarticle/640165/Seeders_Deutsche_Bank_and_FRM_partner_to016.htmlhttp://www.opalesque.com/fullarticle/640710/Launches_Stanley_Asia_head_Ranodeb071.htmlhttp://www.bloomberg.com/news/2012-01-27/citigroup-says-most-proprietary-trading-employees-to-leave-as-desk-closed.htmlhttp://www.ft.com/intl/cms/s/0/f080c3c8-cc08-11e0-9176-00144feabdc0.html#axzz1mjc3WNXBhttp://www.opalesque.com/fullarticle/640503/Launches_Strategic_Value_said_to_raise050.html


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Fund name Strategy Location Current AuM Launch date

Bernett Diversied Global Fund, L.P. Goba maro New York, NY $784.54 J-10

Grant LiquidMacro Fund Goba maro (North Ameria) Santa Barbara, cA $1M Sep-08

Inventum Algorithmic Fund Limited Goba maro (East Europe) r $4.7m J-11

Cross Ledge Long/Short Fund Equity ong/short (North Ameria) Phiadephia, PA $5.7m sep-10

Acacia Master Fund, Ltd. Equity ong/short (teh/resoures) Beijing, china $15m Nov-09

Stanphyl Capital Partners LP Equity ong/short (North Ameria) New York, NY $3.1m J-11

Angle Investment Partners LLC Fund cta Danbury, cT $19.8m J-10

400 Capital Credit Opportunities Fund LP Reative Vaue / credit ong/short New York, NY Feb-09

400 Capital Credit Opportunities Fund LTD Reative Vaue / credit ong/short New York, NY Feb-11

Blue Marlin FIC FIA Diretiona / Equity ong bias Rio de Janeiro. Brazi BRl 54m De-10

Beaconcrest Partners Fund Diretiona / Equity ong/short Boston, MA $1.6m Ot-09

PULL: Princeton Undervalued Liquid Large-cap Fund Diretiona / Equity ong-bias New York, NY $0.250m J-11

Vasken Macro Multi-Strategy Fund Ltd ($ and classes) Goba maro lausanne, Switzerand $784.54 M-11

New Funds in EManagers database

New Funds in Opalesques Emerging Managers Database (January and rst half of February 2012)

Launches
http://www.opalesquesolutions.com/emanagers/2131/index.phphttp://www.opalesquesolutions.com/emanagers/2131/index.php


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Study: Smaller funds and younger fundsoutperform their peers

Aording to a reent study, hedge funds with greater manageria

inentives, smaer funds and younger funds outperform their peers, whie

hedge funds with strit share restritions are not assoiated with higher

risk-adjusted returns. It aso showed that using a onsoidated database

wi hep researhers avoid biases.

The study, Revisiting Styized Fats About Hedge Funds - Insights from a

Nove Aggregation of the Main Hedge Fund Databases, by Juha Joenvaara

and Pekka Toonen of the University of Ouu (Finand) and Robert Kosowski

of Imperia coege Business Shoo (london), aims to present styised fatsabout hedge fund performane and data biases based on a new database

eo styized fats being simpified presentations of empiria

findings.

The studys objetive is to hep hedge fund researhers when they ompare

resuts aross different studies by highighting differenes between

databases and their effet on previousy doumented resuts.

The study used a omprehensive hedge fund database and doumented

eonomiay important positive risk-adjusted performane of the averagefund whie differenes in magnitude are due to differenes in fund size and

data biases, but not differenes in fund risk exposures.

As this performane does not stik with any of the databases when using

vaue-weighted returns, the anaysts show this is tied to fund size and

bigger biases in ertain databases. (Avaue-weighted market return

weighted average of a stok returns, with the weights given by the market

vaue of the stok issue at the end of the previous trading period suh as

the S&P 500.)

The study onudes that hedge funds with greater manageria inentives,smaer funds and younger funds outperform whie hedge funds with strit

share restritions are not assoiated with higher risk-adjusted returns.

Furthermore, severa styised fats are ooured by the hoie of eah

database. So to avoid biases, one shoud use a high quaity onsoidated

database suh as the one used in the study of ourse.

comparativey, a study by Peter Urbani in ast months issue of New

Managers found that hedge funds return distributions are not norma twie

as often as those of ong-ony funds. On the whoe, returns are higher and

drawdowns are ower aross indies.

Investors more open, fewer start-ups

A reent quartery report on hedge funds from Frenh bank BNP Paribas

said that more institutions are now ready to ook at smaer and emerging

managers, as we as those with a narrower fous geographia or setor-

wise.

The barriers to entry for starting a new hedge fund remain very high, after

having risen signifianty sine 2008. Yet, the pipeine of new aunhes we

see remains very strong, said another hedge fund report, this time from

Deutshe Bank, whih went on to say that there were fewer start-ups, but

with higher starting AuM than in previous years, and with managers who

have a better pedigree.

Perspectives
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1989410http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1989410http://en.wikipedia.org/wiki/Stylized_facthttp://www.library.hbs.edu/helpsheets/wrdscrspstock.htmlhttp://www.opalesque.com/NM2/Newsletter_NM_01242012.htmlhttp://www.opalesque.com/640734/Investors_more_interested_in_uncorrelated_strategies_more073.htmlhttp://www.opalesque.com/640734/Investors_more_interested_in_uncorrelated_strategies_more073.htmlhttp://www.opalesque.com/640734/Investors_more_interested_in_uncorrelated_strategies_more073.htmlhttp://www.opalesque.com/640734/Investors_more_interested_in_uncorrelated_strategies_more073.htmlhttp://www.opalesque.com/NM2/Newsletter_NM_01242012.htmlhttp://www.library.hbs.edu/helpsheets/wrdscrspstock.htmlhttp://en.wikipedia.org/wiki/Stylized_facthttp://papers.ssrn.com/sol3/papers.cfm?abstract_id=1989410http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1989410


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Apparenty, the bigger investors are, the more open they are too to

emerging fund managers. Furthermore, investors in genera are more

interested in ooking at hedge funds whih have ess than $100m in

AuM. And the high-profie aunhes are expeted to be among thosehedge funds that attrat the most assets this year.

$1 Billion Club very open to emergingmanagers: PreqinThe UKs Universities Superannuation Sheme (USS) wants to make

a maiden seed investment in a hedge fund, whih, aording to

researh house Preqin, demonstrates that it is not just the estabished

hedge funds whih wi gain assets from the $1 Biion cub (whih

omprises investors who aoate more than $1 biion to hedge funds).

Preqin goes on to say that the $1 Biion cub are muh more opento investment in emerging manager vehies. 70% wi onsider

investment in emerging manager hedge funds. When ooking at a

other investors, this figure fas to 50%. The effet is more marked

when ooking at investors whih woud onsider seeding arrangements

- 19% of a other investors woud onsider a seed investment whereas

49% of the $1 Biion cub.

Those cub investors require an average of 2.7 years as a minimum

trak reord, and their investment is usuay arger than average, at

around $100m, versus $5-10m. Emerging managers shoud not dismiss

the $1 Biion ub as inaessibe then.

High profile launches among those which willattract most assets: Agecroftlooking forward to 2012, Amerian onsutanyAgeroft Partners

beieves that those hedge funds with the strongest brands wi gain

most of the fows. They an be divided into three main ategories,

namey:

1. Hedge funds with over $5bn in assets and a good performane

trak-reord;

2. A few high profie start-ups that have spun out of prop trading

desks from investment banking firms or we known hedge funds;

3. Those sma and mid-sized hedge funds that provide a high quaity

offering and whih have a best-in-breed marketing strategy.

Interest in managers with less than $100m isincreasing: HedgeharborHedgeharbor, an investment paement speiaist, pubished its annuagoba investor survey in January 2012, whih spoke of a trend not

otherwise widey observed. As severa arge bue-hip managers

fatered this year, we saw interest in managers overseeing ess than

$100m under management inrease signifianty, the survey said.

The perentage of survey respondents who woud be wiing to

ook at managers with ess than $25m of assets doubed from ast

years responses. Respondents inuded goba institutiona, private

investors, FoFs.

New start-up guide from Citic reeased a new start-up guide for US hedge funds, whih expains

speifi Start-Up Servies in the US market and how citi an work

with new aunhes to estabish an institutiona quaity business

infrastruture. Just so you know.

- Benedite Gravrand

Perspectives
http://www.preqin.com/docs/newsletters/HF/Hedge_Fund_Spotlight_January_2012.pdfhttp://www.opalesque.com/IndustryUpdates/2234/Agecroft_Partners_largely_upbeat_on_hedge_fund_industry223.htmlhttp://www.opalesque.com/640403/Investors_Still_Support_Alternative_Investments_but_Prefer040.htmlhttp://www.opalesque.com/IndustryUpdates/2302/Citi_Releases_New_Guide_For_US_Hedge230.htmlhttp://www.opalesque.com/IndustryUpdates/2302/Citi_Releases_New_Guide_For_US_Hedge230.htmlhttp://www.opalesque.com/640403/Investors_Still_Support_Alternative_Investments_but_Prefer040.htmlhttp://www.opalesque.com/IndustryUpdates/2234/Agecroft_Partners_largely_upbeat_on_hedge_fund_industry223.htmlhttp://www.preqin.com/docs/newsletters/HF/Hedge_Fund_Spotlight_January_2012.pdf


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craig James knows about voatiity espeiay Asian

voatiity. As Hong Kong-based Portfoio Manager for New

York-headquartered AM Investment Partners, he used to

run the Asia Voatiity Fund, whih took a ong-voatiity

(ong-vo) posture. The fund was up approximatey 25%

in 2008. 2009 saw a retreat from voatiity, and the fund

osed in 09 down about 9.5% (James partiipated at the

2009 Opaesque Hong Kong Roundtabe.)

When he eft AM in Apri 2010, he wanted to reate a new

fund with a different mode a mode that woud make

better use of the voatiity swings.

the Nikkei Stok Average Voatiity Index, urrenty at around 22 (17 a year

ago), saw some wid swings in the ast year, espeiay in Marh 2011 and i n

the summer. And the HSI Voatiity Index, urrenty at around 23 (around 18 a

year ago), aso saw spikes in Marh and in the seond haf of 2001. The index

reahed a high of 58 in January 2008, went up to 104 i n Otober 2008, but ooed

afterwards, staying in the 20-30 range. High voatiity started again in September

2011 when the index reahed amost 52.

James is now the founder and cIO of Expedition Advisors ltd., a new caymans-

domiied equity voatiity fund. currenty in New York, he is moving to Hong Kong

in Marh.

He has reenty seured a signifiant seed apita i nvestment from Prog

Parner, a New York-based fund of funds that fouses on investing in smaer

hedge funds. James antiipates aunhing during the seond quarter of 2012.

After aunh, he wi try raising assets from Asia-based and European-based

investors.

The fund is speifiay designed to take advantage of an inrease in asset prie

voatiity in Asia espeiay the Asia Paifi Region over the oming deade.

Expedition wi provide investors with a diversified set of voatiity exposures. The

ore strategy wi be predisposed to ong voatiity profies but wi be onstruted

to respond to extreme priing disoations in either diretion.

Given the mean-reverting and yia nature of equity voatiity distributions,

Expedition wi empoy an adaptive trading mode and a proess trading mode. A

key differentiating fator to Expeditions investment approah is the appiation of

derivative trading to atayst opportunities.

We invest in strutures that gave investors a diversified set of equity voatiity

exposures aross the Asia Paifi region, James expained. The atua

strutures themseves onsist primariy of over-the-ounter index and singe stok

options, as we as some exhange-traded produts. We obviousy ook to deiver

attrative voatiity entry points for investors and monetize these positions over

the ife of the portfoio.

Sporadic volatility spikes ahead

He and his team beieve that voatiity, struturay, is on the rise - in Asi a as

we as gobay. Aording to them, a key reason for this trend is that effetive

monetary poiy, designed to mitigate asset prie voatiity, is no onger that

Fund that will play with increased volatility in Asia to be launched Q2

Profiles

Craig JamesH
http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=23245987http://www.opalesque.com/index.php?act=static&and=RoundtableHK2009http://www.bloomberg.com/quote/VNKY:INDhttp://www.bloomberg.com/quote/VHSI:INDhttp://www.expeditionglobal.com/Expedition_Global/home.htmlhttp://www.protegepartners.com/www2/Login.aspx?ReturnUrl=%2fhttp://www.protegepartners.com/www2/Login.aspx?ReturnUrl=%2fhttp://www.protegepartners.com/www2/Login.aspx?ReturnUrl=%2fhttp://www.protegepartners.com/www2/Login.aspx?ReturnUrl=%2fhttp://www.expeditionglobal.com/Expedition_Global/home.htmlhttp://www.bloomberg.com/quote/VHSI:INDhttp://www.bloomberg.com/quote/VNKY:INDhttp://www.opalesque.com/index.php?act=static&and=RoundtableHK2009http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=23245987


30/37



effetive. At the Fed, Ben Bernanke and predeessor Aan Greenspan had the

abiity to affet the risk imate through prie stabiisation vis--vis monetary

poiy ation. No onger.

Simpy put, we think the effiay eves of these poiy enatments are on the

deine, James tod Opaesque. centra banks threw a ot of money at the redit

risis gobay, on a warpath to reate iquidity and stabiize markets, but its not

ear that we atuay fixed anything. The unintended onsequene however, is the

fat that further quantitative easing measures to head off future stress senarios

may simpy not work, or at east not work we. Whih eaves us with a potentiay

muh more voatie bakdrop on risk assets going forward. We beieve there wi be

sporadi voatiity spikes ike we those we saw in the summer of ast year, and we

expet these vo shoks to ontinue.

The eve of effetiveness of monetary poiy is rapidy deining and there is not

muh eft in the too kit now from a poiy perspetive, he added. Future stress

senarios whether it be geopoitia (Midde-East) or iquidity driven, wi show

that the probem has not been fixed struturay. We beieve the kik the an

experiment ony reates a higher iff to fa off from.

Voatiity as an asset ass is something the ong-ony ommunity wi have to

embrae.

The reason we beieve investors wi have to embrae voatiity produts is

that arge, everaged risk asset portfoios that everybody is hoding wi be a ot

trikier to manage, he noted. Peak to trough drawdown risk for traditiona ong-

strategies wi beome more unpaatabe and that wi eat away at Sharpe ratios

and other risk measures.

Expedition has taiored a ong-tai, adaptive approah that reognizes the upward

trending nature of voatiity, but utiizes voatiity of voatiity to reate favourabe

entry and exit points aong the way.

So the fund shoud do just fine in that wid rodeo ride.

- Benedicte Gravrand

Profiles


31/37



Bernett Diversified Goba Fund, l.P. is one ofthe 34 goba maro funds featured in Opaesque

souion Emerging Managers database. It is

managed by Sarah Bernett, cEO of Bernett capita

Managemen, llc, a fund boutique based in New

York.

Aso a hedge fund and seurities attorney, she

aunhed the Fund in January 2010 with the aim

to ater to ow-and-midde inome i ndividuas,

thus requiring a minimum investment of $1,000.Apparenty, the fund ended up being dubbed the

$1,000 hedge fund often with a septi onnotation by the media.

It is widey beieved that ony aredited investors an invest in hedge funds. It

is a term used by the U.S. Seurities and Exhange commission (SEc) under

Reguation D to refer to investors who are finaniay sophistiated and have a

redued need for the protetion provided by ertain government fiings.

However, there is no requirement under U.S. seurities aws that hedge fund

investors be aredited, she tod Opaesque in an emai exhange. Rather, it isa myth propagated by the media and ertain finania entities that hedge funds

annot be offered to non-aredited investors. Hedge funds are permitted under

federa seurities aws to offer their seurities to non-aredited investors under

Reguation D, Setions 504, 505, and 506 Furthermore, the Seurities At of

1933 requires a hedge fund to furnish ertain information to any purhaser that is

not an aredited investor at a reasonabe time prior to sae (see Seurities At

of 1933, Reguation D, Setion 502(b)(1)). So there.

Bernetts U.S.-domiied, SEc-registered Fund invests in seurities by way ofregistered investment ompanies (mutua funds), ETFs and diret investments.

A substantia portion of the Funds assets is in seurities i ssued by ompanies

domiied in or with operations outside of the U.S. The investment stye is goba

maro and aggressive, inorporating a ong-term trading strategy and a short-

term diretiona trading strategy. Mrs. Bernett pointed out that in 2010 the Fund

appeared 7 times in Hedgeo.nets top 10 goba maro best-performane

rankings, and in 6 times in 2011.

Bad weather in summer of 2011

At the time of the aunh of the Fund (January-10), equity markets were making a

sow reovery from their ate-08/eary-09 dip. The Fund returned +7% in its first

year, -41% in 2011 (from a disastrous summer), and +24% in January 2012. It sti

has to make a bit more than 20% to reover, and Mrs. Bernett is onfident that it

wi.

So what happened in 2011, when the Fund ost 43% in August and 40% in

September? Here is a short reminder. The S&P500 dipped from a high of $1,343

at the end of Juy, to a ow of 1,119 in eary August, and stayed beow 1,212 ti

it reovered in Otober (to 1,285). It is urrenty at around 1,361. Meanwhie, theMScI Word Index dived from $1,348 at the end of Juy to 1,074 in eary Otober

before making a rebound. It is urrenty at around 1,288. And the VIX (chiago

Board Options Exhange SPX Voatiity) Index rose from 16 in eary Juy to a high

of 48 in eary August and stayed in high eves ti the end of the year. It is urrenty

at around 18, a muh heathier pae to be in for voatiity.

Aording to Mrs. Bernett, as the fund entered 2011 with a ong bias and a ong-

$1,000 hedge fund starts 2012 up 24% after dire 2011

Profiles

Sarah Bernett
http://www.opalesquesolutions.com/emanagers/2166/Bernett-Diversified-Global-Fund216.htmlhttp://www.bernettcapital.com/http://www.bernettcapital.com/http://www.investopedia.com/terms/a/accreditedinvestor.asp#ixzz1m6Utthsghttp://www.bloomberg.com/apps/quote?ticker=SPX:INDhttp://www.bloomberg.com/apps/quote?ticker=MXWO:INDhttp://www.bloomberg.com/apps/quote?ticker=VIX:INDhttp://www.bloomberg.com/apps/quote?ticker=VIX:INDhttp://www.bloomberg.com/apps/quote?ticker=MXWO:INDhttp://www.bloomberg.com/apps/quote?ticker=SPX:INDhttp://www.investopedia.com/terms/a/accreditedinvestor.asp#ixzz1m6Utthsghttp://www.bernettcapital.com/http://www.bernettcapital.com/http://www.opalesquesolutions.com/emanagers/2166/Bernett-Diversified-Global-Fund216.html


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term outook, it was haenged with the most voatie market environment it had

ever experiened.

We beieved that raising the U.S. debt eiing prior to the deadine woud havea aming effet upon the market, and that Standard & Poors downgrade of the

U.S.s redit rating woud not affet yieds and woud be disounted by the market

as a questionabe downgrade based on a math error, she expained. Instead, the

markets drawn-out fous on the European sovereign debt risis ompounded and

engthened the se-off into September, deaying the reovery for the market and

the fund unti Otober.

Maro strategies posted negativey orreated gains in August 2011, with the

HFRI Maro (Tota) Index posting a narrow gain of 0.12% (-3.91% in 2011), whie

the HFRI Maro: Systemati Diversified Index gained 0.94% (-3.63% in 2011).Aording to Hedge Fund Researh, a chiago-based data provider, maro

funds were impated by a wide range of voatie infuenes. Systemati maro

funds generay posted gains in god and U.S. fixed inome, with mixed maro

performane aross other ommodities, urrenies (notaby Swiss Fran and

Japanese Yen) and equities. (See Opaesque Exusive here). The Dow Jones

credit Suisse Goba Maro index fared better in August (amost 2%) and was up

6.44% in 2011.

Less aggressive bets in 2012

Some investors say that, due to prevaiing genera unertainty in the markets, one

shoud avoid aggressive bets in 2012. Mrs. Bernett agrees with that.

Given that goba markets are faing muh unertainty in 2012, it woud be

prudent to avoid aggressive bets in ertain regions suh as Europe unti greater

arity is ahieved and stabiity maintained vis--vis the sovereign debts of Greee,

Portuga, Itay, and Spain, she tod Opaesque. It woud aso be prudent to avoid

aggressive bets in china due to its eonomi ontration. The ontinued goba

eonomi unertainty ouped with a U.S. presidentia eetion year warrants

avoiding aggressive bets in ertain eonomi setors in the U.S. suh as defene,

finane, and heathare.

Athough, she adds, not a aggressive bets shoud be avoided in 2012, as ertain

ompanies, eonomi setors, and geographi regions (suh as emerging markets

and the U.S.) are poised for greater upside potentia in 2012 than they were in

2011.

Furthermore, for 2012, assuming no European nation defauts, she expets the

equity market to sustain an upward trend and end the year in positive territory

whie experiening orretions during the year. She aso expets voatiity to

essen.

Given the budget austerity uts and urrent investor and business onfidene

eves, the Euro area may experiene a very mid reession, she noted. I do not

expet the U.S. wi experiene a doube-dip reession in 2012.

currenty Bernetts Funds favourite equities are BHP Biiton (BHP); Maersk

(MAERSK-B.cO); Randgod Resoures (GOlD); Reiane Industries ltd ADR (RlI);

Simon Property Group (SPG).

Going forward, the Fund wi inrease its exposure to frontier markets, entraEurope, and Sandinavia whie dereasing its exposure to western and southern

Europe. The perentage of assets hed in short positions wi be redued, and

some assets wi be shifted from short-term trading strategies to ong-term buy-

and-hod strategies.

As things are unertain, a wait-and-see stane might be the right one indeed.

- Benedicte Gravrand

Profiles
http://www.opalesque.com/638532/Mixed_results_for_favourite_hedge_fund_strategy853.htmlhttp://www.opalesque.com/638532/Mixed_results_for_favourite_hedge_fund_strategy853.html


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Johannesburg, South Afria-based laurium capiaPty is an investment manager running various funds

investing in Sub-Saharan Afria. The ompany was

founded in 2008 and has over 85 years aggregate

investment experiene between eight professionas.

The firm urrenty manages or advises four funds,

namey, the laurium capita Sub-Saharan USD Fund,

he Zambezi USD Fund, the laurium capita Aternative

Investments Fund, and the Be Rok Fund, with a tota

AuM of approximatey US$160m. The first three funds

are urrenty featured in Opaeque souion EmergingManagers Database.

lauriums o founder and portfoio manager Gavin

Vorwerg and chief Operating Offier Mark Preston

spoke with Opaesque in an exusive interview to

disuss the firms strategies, performane and outook

for this year.

lauriums funds use fundamenta bottom-up researh,

with a vaue bias, to generate a onentrated butonservative portfoios and utiizing derivatives where

appropriate to enhane yied, protet asset vaues, and minimize voatiity.

Preston ommented, We beieve that the South Afrian (SA) and Sub-Saharan

Afrias seurities markets are ess effiient than those of deveoped eonomies

and that stok piking and appropriate fund management an produe attrative

investment returns... The portfoio is onst

opalesque new managers feb 2012

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