Shout It Out Loud

Hedge fund industry interviews


In addition to our daily news feed, Hedge Funds Club’s Shout it out loud publishes interviews with interesting hedge fund managers and other senior industry figures that have something to say.

Interview: Benedict Ho of MaiCapital – a hedgie navigating the crypto world

Benedict Ho

Benedict Ho

Benedict Ho, Co-Founder and Managing Partner of MaiCapital, a blockchain and cryptocurrency-focused hedge fund firm in Hong Kong that Benedict set up with Michael Wong, talks to HFC’s Stefan Nilsson about navigating the ever-changing environment that crypto investors operate in.


MaiCapital Limited is a multi-strategy hedge fund management firm specialised in blockchain and cryptocurrency investments and deploying quantitative trading and arbitrage strategies. Benedict Ho has 17 years of experience in overseeing investment and business operations in institutional asset management companies. He oversaw Fubon Bank’s pension fund and its fund business before co-founding MaiCapital. Prior to Fubon, he was in charge of the trading desk at a multi-billion hedge fund. Ben holds a Master’s degree in Management Science and Engineering from Stanford University and a Bachelor’s degree in Computer Engineering from the University of Washington.


Tell us the story behind you launching MaiCapital in 2018.

MaiCapital was co-founded by Michael and me. We met back when we were students at Stanford and after we graduated in 2002, we pursued different career paths – Michael went into the tech world working on developing Wi-Fi and 4G/5G technologies while I went into the finance world, running trading desks at MCP and later Fubon Bank’s provident fund. However, as we had been heavily influenced by the entrepreneurial spirit in Silicon Valley, we had always been on the lookout for opportunities to start our own business, looking for opportunities that can utilise our combined expertise across finance and tech. Finally, the blockchain revolution arrived and an opportunity presented itself. During the remarkable growth year for the blockchain and crypto industry in 2017, we saw a plethora of investment funds appearing in the market, being offered to investors as if they were all proper investment products. But, in fact, many of them were just prop shops run by a few programmers who have no clue about managing other people’s money nor protecting investors’ interests and managing risks. This presented a perfect start-up opportunity for us – an opportunity that can tap into the immense potential blockchain brings to the hedge fund industry, while at the same time one that requires relevant industry veterans with deep experience across asset management and technology to execute towards. So, in early 2018, we decided to start MaiCapital – to build a truly institutionalised asset management business for the blockchain and crypto industry. Having spent more than 15 years each in our respective industries, both Michael and I understood that that for us to build a sustainable and scalable business, especially one that is in the business of managing other people’s money, we must have a legitimate, proper and institutionalised setup starting from day one. Thus, upon starting MaiCapital, we filed an application to Hong Kong SFC to be Hong Kong’s first licensed hedge fund manager to manage a thematic blockchain fund. And the rest is history.


What can you tell us about MaiCapital’s impressive team?

Our management team comes from a diverse background with different skill sets. I am from a buy-side trading background. Before I co-founded MaiCapital I was in charge of the investment company of Fubon Bank in Hong Kong where I managed the pension fund for their employees. Before Fubon I worked at MCP Asset Management for nine years. I oversaw the trading desk at MCP. They are one of the biggest hedge funds in Asia with US$6bn in AUM with clients from sovereign wealth funds and major banks. Our co-founder Michael is my Stanford schoolmate. He has a strong technical background. He started investing in digital assets and crypto companies in 2015. Marco is an ex-Goldman Sachs director where he oversaw the e-FX business. At MaiCapital I am the portfolio manager while Marco and Mike overlook sales and business development.


What sets MaiCapital’s strategies apart from other crypto hedge funds and blockchain funds?

MaiCapital is one of the first SFC regulated hedge fund managers focusing on blockchain technology and virtual assets-related investments. The target clients are family offices, financial institutions and high net worth individuals. MaiCapital’s flagship product, the Blockchain Opportunity Fund, provides investors with a single stop solution to gain exposure to the biggest and most promising virtual assets, eliminating the trouble of maintaining multiple private keys, wallets, exchange accounts and complex tax filings. The Blockchain Opportunity Fund is an actively managed absolute return fund. The fund will do both long short. The fund aims to generate attractive returns for our investors with reduced volatility and minimised drawdowns. The fund is multi-strategy with a mix of cross-exchange crypto pair arbitrage, quantitative trading and systematic trading by our proprietary technical model. MaiCapital proprietary trading analyses a lot of market and on-chain data. We will quantify factors such as momentum, activity, media sentiment and go long the ones with the best potential return by its metrics. Our team works with large data sets to generate trading signals and building trading models. Volatility is a major deterrent to institutional investors investing in this market. I think that in 2018 you saw a failed case for the crypto hedge fund industry. The average cryptocurrency hedge fund was down over 71%, based on Eurekahedge data, as most of them were just buy-and-hold or long-only strategies. When you mention the word hedge fund, investors are really expecting you will be able to generate profit in both bull and bear markets, that is why they pay you 2 and 20. Most of the funds in the cryptocurrency space are long-only. Our risk management system differentiates our product from other blockchain funds which are mostly long-only with a buy-and-hold approach. When the market crashed on Covid-19 in March with bitcoin plummeting over 50% intraday, our fund did not suffer from any drawdown that day thanks to our hedging strategy. There were a few hedge funds that blew up and shut down during that time.


How do you deal with the ever-changing crypto world where you have to deal with not only asset volatility but also evolving regulations and changing taxation?

By literally working 24/7. But kidding aside, it is indeed quite a challenge to keep up with the ever-changing environment that we operate in. We recognised early in the game that we must have a highly capable, cross-functional team, with expertise spanning across finance, compliance, investment and technology, that can comprehensively monitor all the changes relevant to our business and also come up with innovative ways to address new operational challenges that come along with the changes. We are very grateful to have formed such a team at MaiCapital and we aim to continue to stay nimble so we can adapt quickly as the industry continues to evolve.


How do you as a trader deal with keeping assets safely in custody while at the same time being able to trade in a timely and efficient manner?

It is always a debate about convenience versus security. We do not want our assets connected to the internet but we will need to have access to the assets periodically so we can trade them. The turnaround time from custodian is usually one day and one day is a long time for the crypto market. The price can move 20%-30% in a day for cryptocurrency. Depending on market conditions we will decide the allocation between off-line custodian or on-line cryptocurrency exchange. We have a limit on our exposure to any individual crypto exchange to limit our risk to each counterparty. I think this issue will be solved eventually when bigger players enter the space to provide prime brokerage solutions for cryptocurrency.


What type of investors are you seeing allocating to your funds?

We have high net-worth individuals and family offices allocating to our funds in the past 22 months. Four of those high net-worth individuals are also listed-company owners. Recently, we are now seeing more funds of funds and external asset managers inquiring about our fund products after bitcoin surpassed US$30k. We are expecting larger financial institutions start looking at this asset class soon.


What about your service providers – are they now able to provide an institutional-grade service to an emerging asset class such as cryptocurrencies?

The number of crypto-friendly service providers has increased compared to when we launched our first fund 22 months ago including fund administrator, custodian, crypto-friendly fiat bank, licensed counterparties. However, we have yet not seen a traditional prime broker that services cryptocurrencies as an asset class.


Your business is based in Hong Kong. Your strategy is a global strategy and could be managed from anywhere. Why did you decide to base the business in Hong Kong?

We based our firm in Hong Kong because it is one of the leading global financial centres. The SFC has established itself as a world-class market regulator recognised by its peers and market participants. According to HKEX on 31 December 2020, market capitalisation reached a record high of $47.5 trillion. We are well-positioned here in Hong Kong to capture a part of the capital as interest in crypto assets increase. China is also an untapped market for regulated virtual asset funds. We believe that via the Hong Kong-recognised regulatory framework of crypto assets, we can attract Asian investors, including Chinese ones, to invest in this new asset class.

Interview: Jonathan Garrick, Neutron Asia Absolute Return Fund

Jonathan Garrick

Jonathan Garrick

The Neutron Asia Absolute Return Fund did rather well in 2020. HFC’s Stefan Nilsson checks in with portfolio manager Jonathan Garrick in Hong Kong to talk about the investment strategy, its performance drivers and the recent expansion of the investment team.


Hong Kong-based Jonathan Garrick is the Portfolio Manager of the Neutron Asia Absolute Return Fund which is part of BRIC Neutron Asset Management. Jonathan has over 19 years’ experience in the financial markets working in London, Singapore and Hong Kong specialising in Asia ex-Japan equities. He graduated from Nottingham Trent University with a BA (Hons) in European Business with Spanish. Formerly, the bulk of his career was spent focusing on hedge fund coverage at HSBC, Bear Stearns and Citigroup. There, he was responsible for broking strategies that included equity long/short, event-driven, value and growth. Prior to that, he was Head of Asian Sales-Trading at Cazenove responsible for pan-Asian trading for a global client base. In 2009, Jonathan left investment banking to set up a concentrated long/short greater China fund with private money based in Hong Kong.


Tell us about your Asian absolute return strategy.

It is a concentrated, high conviction portfolio employing a bottom-up, fundamental approach seeking to generate positive returns in all market conditions. We focus on identifying companies in the process of change or transformation. For example, emerging industries, corporate re-organisations or companies with a clear catalyst of change such as regulatory changes, new products or services. When industries or companies transform, we aim to capture the benefits.


You have opted to manage a relatively concentrated portfolio of stocks. How concentrated is it and why and how did you arrive at this approach to managing a portfolio?

We aim for a maximum of 20 long positions with the top 5 holdings typically accounting for 35%-45% of the NAV. Our research process identifies candidates that fit our strategy and criteria then our analysis determines a high conviction case for investment. By limiting the number of holdings in the portfolio it allows us to focus our attention on the best ideas we can find, then allocate our investors’ capital to these best ideas. It also provides hurdle criteria for new investment ideas that must improve the portfolio. All the holdings in the portfolio are due to their specific investment case and uncorrelated to the broad market indices or an ETF.


Your strategy had quite a good result for 2020. What were your performance drivers last year?

In 2020 we focused on numerous corporate actions throughout the year. Several of our main holdings were involved in corporate reorganisations or spin-offs as the new listing criteria, valuations and investor appetite were highly favourable. In many cases, companies with loss-making emerging business units were able to create a separate listing for the unit at an attractive valuation for growth investors to the substantial benefit of shareholders. The IPO market was also buoyant. However, for many of the popular deals, the allocation for a smaller fund was virtually zero so IPOs made little contribution for us. With regards to sectors, there was notable exposure to the fast-expanding internet of things and healthcare companies.


Your portfolio seems to have quite a lot of exposure to Greater China. How have the US-China tensions of recent years impacted how you look at this market?

Adverse changes in regulations are a major risk to our portfolio. In the last couple of years, the US-China trade tensions have weighed heavily on the broader markets. The imposition of tariffs, executive orders and the entities list together with abrasive headline tweets created a volatile environment and heightened the risks and uncertainty. For us, we remained focused on specific investment ideas with a distinct catalyst. In Greater China, we were domestically focused and positioned in companies that were to benefit from government policy, corporate action or behavioural changes.


You have recently added your old colleague Leon Chik to the investment team. You have worked together in the past but at bigger institutions. How is it different now that you’re working together in a small team at an independent business?

We first worked together in 2005 and have kept in touch over the years talking at length about companies and markets. He is dedicated and highly experienced with a broad knowledge of companies from many diverse industries. He was the number 1 rated analyst for Institutional Investor for HK/China Small & Midcaps and consistently in the top 3 from 2011 to 2017. More importantly, he has a strong work ethic and a good nose for ideas. In a bigger institution, you both have your specific roles and responsibilities and only interact when they overlap. In the fund, we will both work towards our common goal and interact at many different levels. He has a thorough in-depth research process with a strong analytical foundation. With a long history between us, we can speak freely and it is more efficient and effective to have quick frank conversations and be able to stress the investment case and gauge the level of conviction. This level of communication is critically important to us.


2020 didn’t follow the plan for any of us. What macro factors do you think are the ones that may impact Asian equities in the coming year?

In the coming year, the main macro factors look to be increasingly constructive for Asian equities. The Biden administration should bring the benefit of a less antagonistic US-China relationship. The likelihood of a larger US government stimulus and spending together with highly accommodative monetary policy brings the fair wind of a weaker US dollar that should prompt more equity inflows to emerging markets. Global governments including China will look to ramp up their domestic economic recovery with consumption boosting measures and infrastructure spending. For us in Asia, the impact of Covid restrictions seem to be diminishing. There is a notable improvement in the economic data and company operating statistics and as a consequence, the corporate earnings rebound in 2021 and beyond should be considerable. Asian companies, particularly in Hong Kong and China, are now incentivised to re-organise with new listing rules and enticing valuations. In 2021 there will be more IPOs, M&A and spin-offs to crystalise value providing a rich pipeline of opportunities for investors.

Interview: Calvin Ng of Aura Group talks tech, private credit and Singapore

Calvin Ng

Calvin Ng

Aura Group co-founder Calvin Ng talks to HFC’s Stefan Nilsson about the role of technology in investment management, the opportunities in private credit, the impact of the global pandemic and Singapore as a financial hub.


Calvin is a co-founder and Managing Director of Aura Group, a global financial services business with operations in Australia, Singapore, Thailand and Vietnam. The business focuses on wealth management, fund management and investment banking and manages/advises over $1b in assets. Calvin is also co-founder of the Finsure Group, one of Australia’s largest mortgage aggregation groups. Prior to establishing Aura, Calvin worked at Everest Babcock & Brown, one of Australia’s largest absolute return investment managers. At EBB Calvin was part of the Direct Investment Team focusing on high yield debt, listed equities and private equity investments.


Aura Group is an alternative investment platform with a technology bias. What can you tell us about it?

Aura Group is a fast-growing fund and wealth manager that specialises in venture capital, private equity and private debt in Asia-Pacific. We are a team of 85 people managing and advising approximately A$800m with operations in Singapore, Australia and Vietnam. Because of these specialisations, in particular venture capital, we are lucky enough to meet thousands of entrepreneurs and businesses every year which give us a unique lens on how the world is changing around us. Live data from our many portfolio companies give us a real finger on the pulse of disruption and technology adoption. We take this data and learnings and combine it with data from more traditional sources to produce proprietary screening tools and research, which we use across the business.


The private credit space has seen an increased interest from many investors in recent times. What is Aura doing in the private credit space?

Aura Group has a strong background in investing in private credit. With traditional fixed income yields at all-time lows and in some cases negative, we believe private credit currently has one of the best risk-reward ratios in the market and is well placed to continue to outperform relative to bonds for the foreseeable future. In private credit, Aura Group currently manages numerous funds including The Aura SME High Yield Fund which provides exposure to SME credit originated by fintech lenders. This strategy has 3.4 years of track record, returning 9.24% in the last 12 months and 38.06% since inception with nil losses. Aura also manages the Aura Property Credit Fund which provided senior mortgage finance against real estate. This strategy has 4 years of track record returning 8.14% in the last 12 months and 43.57% since inception with nil losses. Both funds have navigated the crisis exceptionally well.


How did 2020 and the global pandemic impact Aura Group’s plans and activities?

The pandemic turned out to be a great test of our investment thesis, risk management and most importantly communication skills. Our team really banded together during the lockdown to assist portfolio companies and founders navigate the crisis. Communication became our number one priority and at the time we thought we may be over-communicating, but we have since received the feedback that it was exactly what investors wanted. To assist our investors with liquidity we made a group wide decision not to call any committed capital during the lockdowns and where possible return capital. We returned over A$100m in capital, profits and income in 2020. As we couldn’t travel, we invested heavily into our digital capabilities and content strategy. To our surprise we had material inflows into our private credit strategies during the lockdowns, partially supported by reductions in interest rates globally. We also achieved first close on two new venture capital funds, TNB Aura Fund II, our South East Asia focused VC fund and Aura Venture Fund II, our Australia focused VC fund. To take advantage of market dislocations we launched the Aura Tactical Opportunities Fund a special-situations fund in August 2020 and so are preparing for an interesting year of capital deployment.


What are your hopes and expectations for 2021?

The consensus is betting on a vaccine led recovery, which may already be priced into the stock market. However, we need to remember that the stock market is not an accurate reflection of the real economy as it is made of larger businesses with generally better access to financing. E-commerce and technology adoption will continue to have accelerating tailwinds due to structural shifts to flexible workplaces and home entertainment. Real estate, retail, hospitality and travel all still face headwinds, especially in the SME sector. Someone once said never let a good crisis go to waste. As the pandemic has and continues to cause mispricings in the market we will continue to hunt for good businesses at bargains prices, especially in the mid-market. If you look at historical private equity returns, vintages in the early years following crisis tend to outperform so we will be very busy this year putting sourcing and analysing opportunities to put capital to work.


You are based in Singapore but active internationally. Why have you based yourself in Singapore?

Predominantly because of the economic growth potential of the South East Asian region which we envisage will continue to be supercharged by internet and technology adoption. Singapore is a world class financial centre right in the epicentre of the fastest-growing region in the world. The Singaporean government has consistently implemented visionary policies that have strongly supported of trade, innovation and investment. We are lucky to have been a beneficiary of these policies as an approved co-investment partner of Enterprise Singapore. Singapore is also likely to benefit from structural and regulatory changes in Hong Kong and other offshore financial centres like Cayman and BVI. We are so bullish on the eco-system here, so much that we re-domiciled the Aura Group and moved our global headquarters here in 2017 and are proud to be a Singaporean company.

Interview: Martin O’Regan of Singapore Fund Directors Association

Martin O’Regan

Martin O’Regan

Martin O’Regan of Solas Fiduciary Services was recently announced as the inaugural Chairman of the newly established Singapore Fund Directors Association (SFDA). HFC’s Stefan Nilsson decided to check in with Martin to find out more about SFDA.


As the alternative investment industry in the Asia-Pacific region matures, independent fund directors have become crucial as part of an institutional-quality set-up required by sophisticated investors. Is this why the SFDA has now been launched?

With the launch of VCC in Singapore and OFC/LPF in Hong Kong, we are seeing a trend towards onshorisation of fund structures in Asia. That coupled with the increased regulation in Cayman and other jurisdictions, I felt it was an opportune time to have a body to represent fund directors. The Singapore Fund Directors Association (SFDA) is an industry-driven initiative established to create and support an ecosystem within Singapore’s financial industry for fund directors. The SFDA is the fund director’s destination where they will be part of an ecosystem and community peopled by thought leaders, experts and service providers in the fund investment sector from Singapore and other countries. Singapore remains on track to be the financial hub of choice in Asia. The SFDA will augment this position with a membership of fund directors based in Singapore and the region.


I think you are an obvious choice as the inaugural Chairman of SFDA. You are a seasoned professional with international experience from major finance houses and now leading your own world-class firm. But SFDA is not a one-man show. Who else is in SFDA’s leadership?

With over 25 years of industry experience each, I have assembled a strong committee, consisting of myself, Robert Grome, Hugh Thompson and Soek Khim Chang. Robert was previously Asia Pacific Leader of the PwC Asset Management Industry Group until 2014 and since then has been serving large fund boards in Asia in different asset classes. Hugh is the Global Head of the Maples Group’s fiduciary services business. Having worked in banking and fiduciary services, Hugh has extensive experience of a wide range of financial products and offshore financing vehicles. He has been involved in the closing and subsequent administration of numerous offshore structures including securitisations, CLOs, trusts, hedge funds, asset finance and private equity funds. Khim’s previous role, spanning over 20 years, was Head of Dealing at a large Singapore based fund manager. She managed executions across 25 countries with an AUM of USD4bn. For myself after a long career globally in fund administration, I have been a full-time independent director for the last seven years. SFDA will develop subgroups and working groups to promote and tackle industry issues and work with regulatory authorities on governance initiatives. SFDA will be reaching out to the fund community to encourage members to join.


How will SFDA support the recruitment and development of new entrants to the fund industry in Singapore?

The SFDA intends to support independent directors in Singapore by diversifying and strengthening the development of talent in the financial services sector. We will do this by providing a platform for personal development, exchange of information and learning and building a network for their members. One of the key areas will be education and knowledge. We will facilitate this by authorising and organising high-standard continuing professional development programmes for fund directors and upgrade training for potential directors; developing and promulgating among members the standards, rules, disciplines and guidelines regarding fund directors’ conduct, integrity, and responsibilities; establishing a system of accreditation for directors; keeping abreast of world trends in corporate governance as well as fund directors’ practices; and providing members with value-added services, benefits and regular activities to facilitate networking opportunities.


Are the days of non-exec board directors in name only over? Will we now see boards becoming more professional by having fewer “yes-men” and more independent professionals asking the appropriate questions at the right time?

In the past, independent directors played a passive role. Now with regulators putting more stringent laws, proper governance is mandatory. Hence the role that Independent directors play is vital and diverse. Independent directors provide an oversight function for investors over the fund manager and other service providers to the fund. They act as agents for fund investors. They bring impartiality and experience to a fund’s board and its oversight of the fund’s affairs and activities. The comfort of independence for investors is that you are acting on their behalf; transparency and transparent reporting are what regulators look at. We can see a global trend of more regulation, transparency and independent reporting required for regulated funds. In my opinion, if you want to play in the mainstream going forward, “yes-men” will not work.


What about the issues with directors for hire that sit on too many boards? Should investors worry when they find out that the fund, they invest in has a director who sits on another 100 fund boards or more? Is that a major issue for our industry?

Again, as mentioned earlier, historically independent directors in the offshore space were low touch, passive roles with little or no regulation. In Dublin and Luxembourg fund directors are now regulated and the number of mandates a director is allowed to onboard is restricted based on either the number of clients or the number of mandates a director is allowed hold. That trend is being looked at in Cayman, Singapore and Hong Kong and in the medium term, those jurisdictions will also regulate independent directors that sit on regulated funds. The concept of jumbo directors sets the wrong tone in the industry and the days of holdings 100+ mandates will be over within the next 3-5 years in most if not all jurisdictions.


How do you think the ongoing global pandemic has impacted how fund directors work and how investors are able to do due diligence on directors and funds?

As new regulations and shifting market trends envelope us due to the pandemic, the best way forward is to be prepared. A fund director needs to dedicate significant time and effort on setting up software, cloud platforms and implement an extensive cyber monitoring programme. You need to get the right balance of working in the office and remotely, regularly testing of BCP, cyber monitoring and proper infrastructure will pay off in the end. Directors will need to spend time beefing up their legal documents, policies and procedures, manuals, etc. as in a post COVID environment due diligence on those features will be extensive.


SFDA is Singapore specific. Have you had any thoughts about developing this into a regional power across Asia-Pacific?

While we initially have set up in Singapore, a focus for SFDA is local and international relations to augment a major consultative status and a voice from the fund’s community to government, regulatory authorities and service providers on corporate governance issues; to be recognised as the authoritative advocate on behalf of fund directors in Singapore and beyond; to work in close association with other professional bodies for the betterment of Singapore; to become an essential partner to equivalent associations in other countries in the global promotion of good corporate governance; to integrate and communicate with the various sectors of the public to achieve an awareness of the SFDA’s roles, mutual understanding, and acceptance.


For more information about the SFDA, please visit:

Interview: Noah’s William Ma on lessons from 2020, the outlook for 2021 and the future of HK

William Ma

William Ma

One of the best-known persons in Asia’s alternative investment industry, William Ma currently serves as Chief Investment Officer of both Noah Holdings and its asset management arm Gopher. Prior to joining Noah in 2015, William built a solid reputation through his roles at Penjing Asset Management, Vision Investment Management, Gottex Fund Management and HT Capital Management.


A year into the global pandemic, what has been the most important investment lesson for you in 2020?

Focus on the long-term investment objective with robust risk management and liquid portfolio profile, backed by long term investors with a similar investment philosophy. Invest in fund managers that you trust for a long time with high conviction and help them to solve any problem they might have in volatile periods. Besides diversification, investment globalisation is the second free lunch. We will continue to see its benefit in a de-globalising world.


What are your expectations for 2021?

Markets continue to be volatile but in general, we are positive on equity markets, growth assets and China. Our portfolios have been close-to fully invested in most part of 2020 and will remain so in 2021.


You are the CIO of both Noah Holdings and its asset management arm Gopher. What fund strategies are you currently seeing the most interest in and why?

Noah is one of the largest independent wealth management companies in China with USD 80 billion AUA, and according to AMAC, Gopher is the largest multi-asset, multi-strategy alternative investment management company in China with USD 25 billion AUM. We are seeing opportunities in new domestic China alternative investment strategies due to continuous opening up of the market and availability of new investment tools. For example, we are very constructive on the China multi-strategy hedge fund and see great opportunities in different sub-strategies such as Chinese Convertible Bond Arbitrage – 2019 new Chinese convertible issues are equal to the sum of 2013-2018, which is the same as the total size of 2019 China A-shares new IPOs, a very liquid market with daily turnover at peak equal to 70% of China A-shares. Managers are able to generate high Sharpe return (3x) and alpha (8%) due to the unique characteristics of the CB terms, such as downward conversion price refix. Also, Chinese Volatility Arbitrage – there is increasing popularity of structured products among retail investors. This creates an abundant supply of new investment tools such as options and derivatives for long or short volatility and volatility arbitrage strategies.


A few months ago, you joined the board of the CAIA Association and the Standards Board for Alternative Investments (SBAI) Asia Pacific Committee. How important are these organisations here in Asia as the alternative investment industry matures?

I am very excited to join the CAIA Association global board and SBAI Asia Pacific Committee, in particular at this point for the China market. The domestic China alternative investment industry AUM has recently reached a new high of US$2.5 trillion, which is close the total size of the mutual fund industry in China. This explains the importance and popularity of the alternative investment industry and products to Chinese and global investors. In this high growth area, I believe the domestic Chinese as well as Asian market participants have been actively adopting global standards. Hence, being involved in both associations allows me to facilitate the Asian alternative investment industry in further adopting global standards, as well as help global regulators and allocators to understand each individual Asian market’s practices as they could be quite different.


Professionally, you have one leg in Hong Kong and one in mainland China. What do you think is the future of Hong Kong as a financial and business hub?

I trust Hong Kong will remain a very important Asian financial hub, in particular to the China market. In 2020, the southbound flow to the Hong Kong market is US$82 billion, which is more than 2x than in 2019. Besides capital flow, there is increasing demand from domestic China asset management companies to set up offshore businesses and Hong Kong is one of their favourite locations. On the other hand, given the strong uncorrelated growth in the domestic China market and appreciating RMB, we are also seeing strong demand from global allocators to invest in the China market, both for the growth as well as the alpha opportunities in the alternative investment industry. I believe Hong Kong will play an equally important role in facilitating global investors investing in China through programs like northbound stock connect and mutual fund recognition. Hence, I am very positive about the future of Hong Kong as a financial and business hub in the region. Noah group will continue to increase the business investment in Hong Kong, expanding our team of 120 professionals in the Hong Kong office, in particular, to capture the new opportunities in the Greater Bay Area with US$1.7 trillion GDP versus Japan US$5.4 trillion, India US$2.6 trillion, Korea US$1.6 trillion and Indonesia US$1.1 trillion in the region.

Interview: John Sharp, Partner, Hatcher+

John Sharp

John Sharp

John Sharp in Singapore is a Partner at Hatcher+, a next-generation, data-driven venture firm that uses AI and machine learning-based technologies to identify early-stage opportunities in partnership with leading accelerators and investors, worldwide. Hatcher+ has teamed up with the First Degree Global Asset Management fund platform in Singapore for its H2 Fund.


The worlds of hedge funds, private equity and venture capital have become blurred. Public and private markets and various investment styles are being mixed. Can you describe where and how Hatcher+ fits into the alternative investment space?

We designed the Hatcher+ venture investment strategy to fit the space between non-venture alternative strategies, including private equity, and traditional, higher-risk venture investment funds. In designing our strategy, we wanted to avoid swinging for the fences, in either direction, within the confines of a small portfolio, and instead favour a data-driven, very large portfolio strategy, based on substantive analysis. Our research, which took three years and included an analysis of over 600,000 venture events spanning 20 years, shows conclusively that our strategy is capable of delivering consistently good returns from venture with reduced risk.


What drove you to found Hatcher+?

We came up with the Hatcher+ strategy in response to our earlier experience investing in early-stage start-ups, both as angels, and institutionally, via our first investment vehicle (Hatcher H1), which we founded in 2013. During the time we spent investing that first US$20 million we raised, we were constantly reminded of the qualitative and subjective nature of our work and became more and more aware that venture capital was lagging other asset classes in terms of technology adoption. This, combined with some early research data that showed an overwhelming preference by LPs to invest in larger, more diversified portfolios, let us adopt a data-driven approach for Hatcher+ and the H2 Fund. Hatcher+ research shows that 67% of venture AUM is invested in managers that have greater than 500 investee companies in their portfolio.


Hatcher+ is using artificial intelligence and machine learning technologies to identify early-stage investment opportunities. I understand that you have built a lot of proprietary tech to run the investments and your firm. How important is cutting-edge tech to an asset manager like Hatcher+?

The bulk of our deep learning efforts have actually gone into understanding how we can modify portfolio construction theories to do a better job of capturing positive returns on a more consistent basis. To date, we’ve created almost four billion virtual portfolios, ranging in size from 10 to thousands of portfolio companies, across virtually all sectors, investment stages, and geographies. We’ve also spent a lot of time looking at how we can do a better job of project selection and performance analytics, and in January we will be rolling out the next version of our VAAST (Venture as a Service Technology) platform, which will enable investors to utilize our AI-powered analytics and process automation as part of their operations. We’ll including, for the first time, an Impact Readiness score, which will enable VCs looking to build portfolios based on impact investments to get an early read on opportunities we identify. In terms of how important technology is to venture fund managers, typically, it hasn’t been important at all. It’s, unfortunately, a truism that most venture investors spend less on data and technology than the average start-up – whereas large investment banks and brokerage firms spend millions, or even billions, on data analysis and automation. We have adopted a similar approach to the large banks and brokerage firms – and in the past three years at Hatcher+, we have spent over US3m a year building data models and automating our business processes, in support of the massive scale that our research data shows is required to win in the venture space.


What is Hatcher+ doing to make your style of venture capital more in line with what alternative investment allocators want and need? Are you facing pressure from investors and startup founders to evolve more in certain areas of your business?

Alternative investors I’ve spoken with have long eyed venture as a potential place to increase allocations – but picking winners among the wide range of different fund managers and strategies is hard. Most people that run venture funds are of high intelligence, and with a strong history of personal success, prior to entering the venture industry. However, 75% of the time, those qualities do not translate into consistent returns, or even returns capable of beating the Nasdaq. Our strategy, which some have termed “The Moneyball of Venture”, relies less on personality and subjective decision-making and more on quantitative analysis and the underlying probabilities that a given basket of investments will yield a power curve effect – or a dozen power curve effects. Where we see venture going is more of a hybrid model, where firms like ours will source and diligence deals and create large pools of high-quality startups, which our investors can use of feeder-funds for their own direct investment. We know from our discussions with family offices, corporate venture groups, and institutions, that many have plans to start their own direct investment firms within the next five years. Those firms will need deal flow, data analytics, fund structures, reporting capabilities, and a host of other services. We see it as our mission to create the deal flow and services necessary to help them succeed with these efforts.


Where do you stand on investor liquidity? Historically, the illiquid nature of PE and VC funds have caused some investors to prefer hedge funds and other more liquid strategies.

The historically illiquid nature of venture is one of the areas I have personally focused the most on. A ten-year lock-up is great if you’re an insurance company, and just want to invest capital and come back in ten years and find more waiting for you, but it’s less appealing to many other investors – especially those that are active in the direct markets. However, as we’ve seen historically in the bond market, for example, lockups only exist to the extent that derivatives (and secondaries) don’t. We’ve taken the first steps towards creating a liquid market for venture-based securities be creating an exchange-traded note, which is currently traded on the Wiener Bourse, and secured by units in our H2 Fund. We expect the market for derivatives will grow significantly in the coming years, with token-based offerings leading the way, especially as larger portfolios, such as ours, begin transparently reporting index-style returns.


Hatcher+ has been actively investing in the fintech space. A lot of the action in the fintech space has been focused on consumer and retail solutions such as payments. Have you also invested in or considered any fintech solutions for hedge funds and other asset managers?

We have successfully invested in payments (Telr) and trade finance platforms (ASYX) – because we like the growth available in the emerging markets these players operate in.  The one caveat about investing in fintech in emerging markets is the time needed to get regulatory approvals – but both these companies seem to have navigated those steps very well. The Hatcher+ VAAST (Venture as a Service Technology) Platform remains by far our largest investment in the fintech space. It provides a complete suite of white-label-ready venture capital functions and analytics, and any family office, CVC, or institution can be onboarded within minutes.


What kind of people are you recruiting to your firm? Are you focusing more on quants and techies than people with finance backgrounds?

When it comes to hiring, we hire more data geeks and programmers than finance people – I think that old canard of the brokerage that had 10 developers in 1990 and 1000 sales guys that then flipped to having 1,000 developers and 10 sales guys is pretty accurate for what is happening in the venture capital industry. This is an industry that has lagged pretty much every other asset manager for decades, in terms of investing in technology and scale, and is only now waking up to the fact that risks can be much better managed, and returns made much more consistent, by using data to drive portfolio design, and business process automation to manage the fund. We may be one of the first, but I don’t think we will be the last firm to go from spending US$30,000 a year to spending over US$3m a year on data and tech. This is going to become an arms race, with data and deep learning models – and global access to deal flow – as key determining factors as to who wins.


You have opted to run the business from Singapore. What made you base the business there?

Singapore has emerged as the best place to set up a venture investment firm for a whole host of reasons, not just limited to the ready availability of capital. The legal and financial infrastructure is superb, the regulator is forward-thinking, the venture structures, such as the VCC structure, are well-thought-out and the whole place just works really well. Add to that the fact that it is one of the best-connected and respected countries, with one of the highest educated workforces and highest standards of living in the world (with among the lowest rates of taxation!) – and that combination is pretty hard to beat!

Interview: Adrian Gornall of Astris Advisory Japan on creating alpha from smaller company research

Adrian Gornall

Adrian Gornall

With some three decades’ worth of Asian experience, Adrian Gornall returned to Japan at the beginning of 2020 to take up a new role with Astris Advisory Japan as global investors’ interest in Japan seems to be on a longer-term upswing. HFC’s Stefan Nilsson decided to have a cat with Adrian about his ability to create alpha from his research of smaller Japanese companies.


Your business is based on visiting smaller companies both on-demand and on your own initiative. Tell us about it.

I have been involved in Asian equity markets for more than thirty years, largely focused on Japan as a salesman, however, I also have long-only Pan Asian portfolio management experience which has also greatly influenced my formatting and interpretation of information. I am fluent in both Japanese and Mandarin among the seven languages I speak. Over the past 20 years, I have developed a focused process for making management visits to companies, largely to those smaller companies where there is little or no analyst coverage, or in larger market capitalisation companies where I believe consensus forecasts and recommendations may be excessively skewed, and equity performance may not reflect the reality of market conditions. In my overall activity, I take a “top-down bottom-up” approach to selecting companies to visit, based largely on subjective judgements pre-visit and then a technical, relative mean reversion, approach to timing entry post-visit. Thematics, performance and “style” based selection are all important pre-visit, generally with a close eye to “what the market wants now or may want very soon”. I try to make a longer-term assessment of the overall business rather than whether valuations are appropriate at any particular point in time, except in certain exceptional cases where clearly the market is mispricing an asset. Quality of management and information, competitive environment and strategic moats and execution are all highly important factors. I don’t build models or suggest target prices and my conclusions are either “positive” where I believe having the equity as a long position in a portfolio will add alpha over time, or “neutral” where I would not want to have a long position. I have made 200 visits or management calls since coming back to Tokyo from Hong Kong at the beginning of the New Year. There are two elements to my business at present. Firstly, in my “bespoke” work, I charge clients fees on a per meeting basis, which include all pre, and post-meeting write-ups. Clients either give me a “script” to follow or ask me to “kick the tires” and give my own conclusions. The final report format can be either in my generic note format or one specifically requested by the client. All aspects of the client process are protected by confidentiality clauses in our service agreements. Separately, confidentiality periods are agreed with regard to each company meeting, where a client may wish to take action. Our compliance team monitor all my communications to clients and any recommendations I may make. I also make my own visits where I think a company has a business model that may be of interest to clients. The second area of my business is my subscription-based “Japan Small Cap Monthly, Hidden Gems” product which contains an average of ten notes on recent visits not covered by confidentiality. Included in the subscription is one hour per month of telephone calls with the client on any and all aspects of my visits.


What type of clients do you have that are keen on small company research from Japan?

My client list includes both long-only and long/short accounts and geographically some are Japan-based and others overseas.


What’s your edge as an equity analyst? Is it finding and covering companies that other analysts don’t cover or is it your questions and research that are the secret alpha sauce?

I don’t really consider myself an “analyst” as I don’t develop financial models or give target prices. This approach means that I am able to roam across any sector and any size of company and look for well-timed ideas. In addition, there is no limit to how many companies I can “cover”. I have a keen nose for a story that will find traction with the market and generally, this “turning over rocks” approach leads to tremendous alpha generation. In particular, my ability to engage with management means I can judge their ability to sell their own business to investors.


You are a foreigner visiting small Japanese companies, companies that are often led by senior Japanese management. Do you find it an advantage or disadvantage that you stand out from the crowd when it comes to gaining access to meetings and information?

I have always enjoyed very high-quality access to companies in Japan and take great pleasure in all my meetings. I am not aware of any bias at all towards me.


You spent quite a few years working in Hong Kong before returning to Japan this year to join Astris Advisory. What made you move to Japan now?

Well, I will be the first to admit that with hindsight, the timing of David Shirt’s offer to join his unique and rapidly growing team at Astris Advisory was extremely fortuitous. However, even without Covid-19, I had been looking for a way back to Japan for several years and am really immensely grateful to have the opportunity to work here at Astris in the midst of what appears to me to be a long-term upswing in global investor interest in Japanese assets of all classes.

Fund manager interview: Nelson Ilham, Artheon Global Credit Opportunities Fund

Nelson Ilham

Nelson Ilham

HFC’s Stefan Nilsson checks in with Nelson Ilham, Principal Fund Manager of the Artheon Global Credit Opportunities Fund, in Singapore for a chat about his business, investment strategy and the questions investors need to ask themselves as 2021 arrives.


You set up your own business and launched the Artheon Global Credit Opportunities strategy in 2019. What can you tell us about the strategy and why it differs from other credit strategies?

I was glad to have the opportunity to set up the fund together in close collaboration under our investment management platform, First Degree Global Asset Management. The firm is helmed by Dr Stephen Fisher and Anthony Morgan, both of whom are well-credentialed industry veterans. My fund’s strategy is unique in a sense that it constantly seeks value opportunities in the liquid fixed income/credit spaces that could replicate near-equity positive returns of around 10%-15% p.a. in USD over the medium term without taking equity-like volatilities. Moderate prudent leverage is deployed dynamically to take advantage of attractive opportunities during normal-to-favourable market contexts but could be reduced or hedged away when we find fewer value opportunities or at an onset of broad market volatility. Credit is also a very interesting asset class for us to have a built-in defensive absolute-return mode that targets a mere 4%-6% p.a. return in a tougher market context. We employ an extensive diverse set of macro signals for our agile portfolio positioning, making this credit strategy as probably one of the most dynamic “macro-aware” credit strategies out there.


You started your career in the US, but you now run a global investment strategy from your native Singapore. Are there hurdles you face because you are running it from Singapore rather than from, say, New York or London?

I’m grateful for having accumulated a broad perspective of the world, gained from my experience in both the West and the East. For my global credit strategy, it is actually an advantage to run this from Singapore, which is right in the heart of Asia, arguably the world’s most dynamic economic region which already produces slightly more than half of the world’s GDP (by purchasing power parity) and is on track to reach 60% by 2030, as according to the IMF. We see many more value opportunities here, with sustained availability of wider credit spreads despite the region’s supportive growth profiles and relatively better hard and soft economic infrastructures when compared with other regions. Having said that, we also spot attractive credit opportunities in other developed and emerging economic regions and do not wish to miss participating in some of those. Generally, up to half of our overall positioning would be in Asia due to inherent values we see here; the remaining would be across the rest of the world. This is in contrast with many global credit strategies run from places like New York or London which may have 70%-80% of their portfolio positioning in the traditional developed markets of North America or Europe, hence mimicking market issuance/trading volumes rather than true value opportunities available in the global credit space and which are currently getting burdened by low yields and spreads in those markets.


Prior to launching your own business, you built your fixed income expertise at major institutions such as HSBC and RBC. How different is it for you to now actually run money at your own firm from advising clients of big finance houses?

While managing fixed income desks at various major institutions, I directed much of my efforts and passion towards bringing the best possible performance and risk management to clients’ portfolios. That was akin to an investment management function, as opposed to more general, less-attached advisory and sales-related functions typically adopted at banking institutions. I developed and refined a flexible, less-constrained global credit philosophy as the flagship strategy, which I saw bring investment outperformance to clients who adhered to the strategy. AUM flowed in quite well following the performance. In a further collaboration with discretionary portfolio management counterparts within an institution I was at, the strategy was specifically implemented for various segregated mandate accounts and generated robust performances. Nevertheless, advisory-based client accounts still made up the vast majority of AUM in such institutions and generally advisory clients were not as systematically fast or responsive enough to fully replicate this advocated flagship strategy to realise its maximum potential. I also recognised the huge logistical and inherent structural problems of disseminating this flagship strategy throughout typically complex large institutions. With Artheon being an independent fund and whose sole emphasis is to manifest to its best extent investment performance from this flagship credit strategy for investors, I’m confident that the strategy can be implemented more efficiently and flourish further under this format.


2020 has been a year that no one expected a year ago. Have the year’s major macro events – such as the global pandemic, tumultuous US elections, ongoing Brexit issues and much more – in any way impacted how you view markets, risks and portfolio management?

The beauty of our diverse set of macro signals is that, from the perspective of the signals, major macro events happening in 2020 looked the same as the duration-led risk-assets selloff in 2018, the Fed tapering and subsequent commodities-led emerging-markets selloff in 2015 or the recurring bouts of European peripheral debt crisis in 2010-2013. The signals have been reliable enough to give us advance alerts on impending risks or opportunities. We can throw in many contexts to understand each market cycle or mini-cycle, but sticking with the signals in advance means enforcing strict disciplined processes in adding or reducing/hedging credit positions, leveraging or deleveraging, and ignoring noises that come and go. In early February 2020, I was fortunate enough to remember the scenes I watched in a 2011 movie called “Contagion”, which aptly portrayed a severe global pandemic. While markets were still quite complacent then in early February 2020, news about Covid-19 started to stream in; I thought what was portrayed in the movie might happen to a certain degree and I used that context to understand the macro signals employed within the strategy. The context was useful, but the signals had the final say on what was about to happen and how severe or mild it could be. That’s why I believe in daily real-time risk management and not having any entrenched views to distract us from that. I’m convinced that a dynamic risk-based strategy can beat typical buy-and-hold conventional strategies. The way our credit strategy views markets, risk and portfolio management have always been consistent and did not change at all in 2020. Contexts may come and go, but the signals stay put in our employ.


After this rollercoaster of a year, what are your predictions for 2021? Is it naïve to hope for some breathing space?

I don’t like to make specific predictions beyond 3-4 months, for the fear of getting entrenched in those and losing the dynamic portfolio and risk management approach which has been the key cornerstone of our credit strategy. What I like to do is to pose questions which could be used by us to understand potential value opportunities or risks in specific credits that may come up in the near future. The following questions would be for us to contemplate in 2021: Can the market stand on its own feet without the current assorted cocktails of liquidity from central banks? Will post-pandemic demand rebound create an inflationary shock, as producers regain upper hands from demand surge? Will certain speculative assets like some earnings-unproven tech stocks lose ground when liquidity pump tapers off and how will that affect the broader market of conventional assets? Will cheap liquidity drive aggressive debt-fuelled industry consolidations, increase the new giants’ pricing power and eventually drive up inflation? Or will such consolidations increase systemic risks when the giants overleverage themselves and struggle to manage bloated debts? When will a further stretch of fiscal debt reach its tipping point in some fiscally-strained developed economies? How will markets react to proposals of higher taxation to address pandemic-induced fiscal imbalances? How will the Biden administration set its policy tone in the first 100 days? Will it sound out conciliatory short-term aspirations tolerable by Republicans? Or will it instead promote major long-term four-year goals that may set it up for an immediate clash with Republicans? Will China’s tightening of the private sector eventually dampen entrepreneurship as a proven major growth driver or will it make the economic system more resilient instead? Will fintechs unknowingly increase systemic financial risks with implications to the broader market or are they just looking to muscle their way into traditional banking with a technological edge, eventually threatening stable earning sources of conventional banks? I have a lot more questions that we could ponder over, but we already have enough homework to go through from now until the start of 2021.

Fund manager interview: Cedric Rimaud on the greening of finance

Cedric Rimaud

Cedric Rimaud


The greening of the financial sector has got hedge funds and other alternative investment managers and investors taking a closer interest in this fast-developing sector. HFC’s Stefan Nilsson decided to find out more and had a chat with green finance specialist and fund manager Cedric Rimaud in Singapore.


Cedric Rimaud has a long career and deep knowledge of corporate bonds and green finance. He has worked as a fixed income portfolio manager, credit trader and credit analyst and has specific expertise in emerging markets. Having previously worked at firms such as Credit Suisse, Citigroup and JP Morgan, he is now managing the Earth Wake Green Impact investment strategy at First Degree Global Asset Management and is the Singapore representative for the Climate Bonds Initiative.


You manage the Earth Wake Green Impact strategy. What can you tell us about this investment strategy?

Earth Wake is a new initiative to create an investment strategy focusing on green and social bonds in Asia and the Pacific. Why does it matter? Because green and social bonds are, simply put, superior types of investments. While offering a market return, they also deliver on specific objectives that will protect these investments in the long run, by going into sectors that are less likely to be downgraded due to the negative effects of climate change. This is mostly private or public debt: the capital put to work will be repaid at maturity while offering a predictable payment each year. If you look at the profile of emerging markets high yield debt in the context of a diversified portfolio, you will see that its risk/return profile is superior to a lot of other forms of investments. In addition, we get to provide capital for projects that make sense for people and for nature. This is the best opportunity out there. If you look at how these securities have behaved in the markets’ repricing this year, you will see that they have outperformed by being in sectors that have been less impacted by the pandemic. As climate change unfolds, we will see these securities outperform in the long run.


Tell us about the Climate Bonds Initiative that you are involved in and why it matters.

Climate Bonds Initiative (CBI) is a UK-based non-for-profit acting on behalf of investors to develop a credible green bond market globally. I am their representative in Singapore, acting as the ASEAN Commercial Manager. Through this role, I am supporting various initiatives, such as awareness-raising events – conferences, workshops, webinars, etc. – and acting as the go-to person for anyone within ASEAN looking to get more information on green bonds. CBI is delivering certification for new green bonds issued in the market against its Climate Bond Standard, relying on a science-based taxonomy developed for various sectors of the market. This creates trust among investors that the projects funded through the issuance of green bonds are aligned with the objectives of the Paris Agreement: to reorient financial flows towards assets and activities that will limit global warming well below 2 degrees Celsius against pre-industrial levels. This avoids “greenwashing” and underpins the strong growth of the green bond market.


How can the global investment industry avoid greenwashing? Is the recent increase in interest in ESG attracting more greenwashing or is it driving the industry to become more honest and professional?

Green investment is about resisting the changes in our climate. This is grounded in scientific evidence and includes a reduction in carbon emission, or greenhouse gases, in our atmosphere. Science tells us which assets and technologies have a limited effect on carbon emissions: we want more of these. Science tells us what activities are responsible for carbon emissions: we want no more of these. This is why standards exist that specify what these assets and technologies should be. Investors need to demand the highest standards for their investments. The Climate Bond Standard delivers this, as well as the EU taxonomy, currently being developed.


Obviously, proper green investments can be great from a human and environmental point of view, but what about the investment case? Do green bond investments stand up to scrutiny purely as a financial allocation?

Totally, they are investments in promising sectors of the economy, which will outperform in the long run: renewable energy, electric cars, low-energy buildings, railways, water infrastructure, waste management systems, sustainable agriculture, etc. They avoid sectors like fossil fuels, like coal, oil and gas, mining, airlines, diesel-powered automobiles, etc., which are sectors that will see a radical shift, additional costs, if not an outright downgrade. We just witnessed the impact of the COVID-19 pandemic on the airline industry. Similar things are likely to happen to these “brown” sectors as well, although maybe in a more protracted fashion.


We have a shift in US leadership coming up on 20th January with a President-Elect who is already showing much more interest in global climate initiatives than the current US President. How important do you think Biden’s election win is for global climate change initiatives?

This is very significant, as the US bond market is the largest, the deepest and the most diverse bond market globally. It is already the largest country, in terms of green bond issuance, but we expect this trend to accelerate. Climate change is a global issue that needs the cooperation of all countries. China and Europe are already well embarked on the process of greening their economies. The US, through the actions of its companies, has already started. Renewable energy is already employing a lot of experienced professionals in the US, this will continue, as well as in other sectors as well. At least, we have a global theme that is bringing nations closer together. This is a good thing for the stability of the world, and therefore for investments. The greening of the financial sector is bringing more disclosure as well, which investors should welcome, as it means that they are better informed on what the ultimate use of the investments is.


You are based in Singapore. How does Singapore compare to other Asian financial centres when it comes to green investments?

Singapore is already the largest market in ASEAN for green bonds and loans, but it is mostly focused on green buildings. Other ASEAN markets, like Thailand, the Philippines or Indonesia, have seen some issuance in other sectors. We have seen some Asian issuers come to Singapore to issue green bonds here as well. Singapore benefits from a very solid legal framework, high ethical standards and English Law. It also hosts large domestic, regional and international investors with large pools of capital to deploy across various types of assets. We expect that Asian capital will welcome opportunities to invest in the region. The reserve of potential growth in South East Asia remains very exciting. There will be 800 million consumers by 2050 with rising purchasing power, this cannot be avoided. Singapore stands right in the middle of it. It has got a very solid foundation in terms of intellectual capital and is opportunistic in attracting the best expertise from around the world. Comparing with other financial centres is difficult, as each location has its own specific advantages. But Singapore is a place that will continue to strive, in our view.


This past year we have seen many changes to travel, work, socialising and so on due to the global pandemic. Some of these forced changes have had a positive climate impact. Do you think that this will last or will things quickly turn back to old ways once the pandemic gets under control?

I think that nature has definitely taught us a lesson this year, with this crisis. It has forced us to reflect on how our economies are organised and “sustainability” has become the buzzword in all corners of society. This is also advocated by the most important segment of our own: our young people, whose future depends on our actions today more than ever. We are already adapting to the new world and our connected economies are taking on a new meaning. In my view, social distancing has actually brought people closer together. In our business, we have held webinars with up to 500 people connected at a single point in time, with many more listening to the recording. This is difficult to achieve the same in a physical setting. Yet, having physical meetings will continue to be important. We are social beings after all. To me, old ways are already adapting to new ways, as we have done since the caveman. This is nothing new. Out of this crisis is a new attitude emerging. We see it in the investment world. To think that investing with objectives outside of a financial return would become a winning value proposition would have been, let’s say ten years ago, unthinkable. We are now at the dawn of a new decade, with the United Nations calling for the Sustainable Development Goals to deliver positive change by 2030, while nations like Japan or Korea announcing that they will become carbon neutral by 2050 and China by 2060. This means new business sectors to invest in. This is very exciting!

Fund manager interview: Gary Norden, NN² Capital

Gary Norden

Gary Norden

Gary Norden in Australia is a seasoned derivatives trader who has been Head of LIFFE Options at NatWest and Head of Futures & Options Trading at Credit Lyonnais Rouse. As Gary is now launching a hedge fund business, NN² Capital, HFC boss Stefan Nilsson decided to check in with him to find out more.


NN² Capital specifically designs strategies that have close to zero correlation to equities. Can you tell us more about the investment strategy and why it is a bit different from what is already out there?

We started off by designing hedge trades for equity investors that would perform well even on an equity market rally. Over time we realised that the trades we designed have roughly zero correlation to equities in all market conditions and so decided to specialise in this type of strategy. Our trades are not found through just crunching data, they are constructed based on our decades of experience. Therefore, we believe it is hard for other funds to replicate them. So, our aim is to help investors smooth returns and reduce risk. We are not trying to be just an absolute return fund. We currently have half a dozen or so trades in the portfolio but are testing more and have plans to add many more.


You are based in Australia and your co-founder Nam Nguyen is based in Canada. Will you operate the fund with the team split up in two locations? If so, how do make that work practically?

Nam and I have worked together for around five years now so we have our own processes in place. Most financial institutions work across multiple locations so it isn’t a unique problem. We have already begun planning for how we will expand once AUM grows sufficiently and are consulting with an experienced COO in that regard.


You have planned the launch of your fund business over the past couple of years and now plan to launch in the coming months. What has been the hardest thing in getting to launch?

The hardest thing is probably just committing to go through with it. We could have just kept trading for ourselves but we had such a strong belief that we were creating a unique style of trades and fund that we thought we had to give it a go.


As a start-up fund manager, have you felt that service providers have been supportive during the set-up process?

I think all the service providers we contacted were supportive and professional in advising on the areas of their expertise. We were particularly impressed with our fund administrator Vauban and they have helped us across a number of different areas.


This year has been a strange and unpredictable year for most. How has the global pandemic impacted your launch preparations?

Our launch has been delayed primarily due to the pandemic. There were many documents that needed to be sighted and signed by a person of authority such as a Justice of the Peace and for some time, during lockdowns, for example, it was very difficult to get to see those people. Perhaps the hardest thing though has been the inability to travel to meet prospective investors. Online meetings may perhaps work OK for existing funds but for start-ups, meeting people in person is particularly important. We are very much looking forward to Hedge Funds Club events in 2021. It’s a shame we couldn’t go live earlier because our strategies have fared well this year, particularly in March but there are no short cuts to the process so we worked through it as quickly yet as methodically as we could.


In 2020 the macro environment has been hit with many twists and turns, not just because of the pandemic, but also an eventful US election, the ongoing Brexit situation and many other things. Have these events impacted how you as a fund manager look at markets and risks?

We always look at extreme scenarios when we design our trades. As I said earlier, we don’t just design them from backtesting or data crunching. By designing our trades in this way, we know specifically what the P&L drivers are and the main risks to them. We then stress test those risks to ensure we are happy with the P&L profile, drawdowns, etc. Our trades are designed to work in all market conditions and we try to take macro risks out of the equation as much as possible through the way we design the trades. We use very little leverage and also strongly favour long-volatility option style trades to further reduce risk. Between us, we have over 50 years’ experience so navigating through these types of risks and events are definitely important for us but also something we have been doing for a long time. As an example, early this year, around March-April, we saw many correlations tend towards one, i.e. many markets exhibited strongly positive correlations. Many low-correlation funds got hurt. Not only did our strategies show a profit but just as importantly, our correlation to equities remained consistent around zero. We were obviously delighted with this.


The pandemic has caused many investors to rethink allocations and, in some cases, seen them consider new fund managers. Do you think the timing of your launch may create new opportunities for you when it comes to more hedge fund investors looking at you?

We hope so! As I say, we believe we have a unique product but interestingly some funds of funds, for example, have said that it is hard for them to allocate to us because they can’t pigeonhole us in one particular strategy type! We don’t want or intend to become like other funds and will continue to be different though. However, we face the same issue that all new small, start-up funds face in that many larger investors, FoFs, etc will only allocate once we hit $Xmillion but it is hard to hit $Xmillion without a large investor. So, we remain on the lookout for such an investor.


What’s the story behind your company name, NN² Capital?

Finding a name for a hedge fund is so hard, almost everything is taken! NN² is taken from our surnames. We feel that Nam as a PhD/quant and myself as a derivatives trader together represent a more powerful team than the two as individuals, hence Nguyen-Norden squared.