Singapore Hedge Fund

Alternative asset management in Singapore

New Asia-focused team at FrontPoint

FrontPoint Partners hired a new Asia-focused event-driven and special situations hedge fund investment team, led by portfolio manager John Foo.

The Singapore-based team all came from Kingsmead Capital Advisors, which Mr. Foo founded.

Joining him is Edgar Chia, analyst, and Hubert Yong, trader; they held similar positions at Kingsmead Capital, according to a FrontPoint news release.

Kingsmead Capital liquidated its similarly managed Asian hedge fund in July 2008, said Erica Platt, a spokeswoman for FrontPoint’s parent, Morgan Stanley Investment Management.

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Recruitment starting again for hedge funds based in Singapore and Hong Kong.

From, some good news on Asian Hedge Funds with new activity noted in Singapore and Hong Kong. The dark days may at last be over for Asia’s hedge fund sector, but recruitment is still selective, senior and sales-focused, with a real recovery not expected until next year.

Hedge funds are making a minor comeback after suffering their worst year on record in 2008, outperforming global benchmarks and experiencing an inflow of new assets, according to data provider Eurekahedge.

Asia has experienced a lot of the recent action. Winton Capital Management, for example, is starting a new fund in Japan and hiring staff in Hong Kong – its expansion coming just months after rivals like GSO Capital Partners, HBK and Ramius retreated from the region.

And ex-bankers are seizing the opportunity to start up their own firms in Asia. The list of budding fund managers includes: Nick Taylor, ex-head of Citadel Investment’s principal investments business in Asia and Europe; Shafiq Karmali, a former Goldman Sachs trader; and Edwin Wong, previously a Lehman Brothers MD.

Hedge fund recruitment is for now small-scale and focused on the front office. Jared Ng, regional consulting director, PeopleSearch explains: “Because short-term revenue is essential for the survival of companies to meet their short-term liability, revenue-generating jobs are more in demand. As a result, there have been more openings for sales positions.”

Peter Douglas, Asia Pacific council member for the Alternative Investment Management Association, says funds want experienced professionals who can hit the ground running. “In Singapore, Artradis, for example, has been taking on some senior people, basically taking advantage of a cyclical opportunity to add talent that’s now available,” he adds.

Funds that have not been so badly affected by the financial crisis are starting to recruit again after lying low for the past nine months, says Angela Kuek, manager, banking and financial services at Hudson in Singapore.

Douglas thinks the current fund inflows in Asia are coming mainly from specialist investors. The “real volume” is likely to return next year when more capital enters the market. “Asset size directly drives revenues and therefore the capacity and inclination to hire,” he adds.

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AIMA Singapore: Draft European Directive on Alternative Investment Fund Managers could significantly impact Singapore’s hedge funds

From Opalesque, some potentially bad news for hedge funds in Singapore.   The Singapore Branch of the Alternative Investment Management Association (“AIMA”), the industry trade association for hedge funds, warns that the European Commission’s draft directive on Alternative Investment Fund Managers will make it unduly difficult for Singapore based alternative investment managers to access the European market. The directive will also complicate the allocation of a global portfolio’s fund management, making the delegation from Europe to Asia near impossible.

Under the directive, managers based outside of Europe will need to obtain a special marketing passport before being granted access to the European market. However, the passport will not be available for three years after the introduction of the directive. Significant obstacles to acquiring the passport will also be imposed; regulatory equivalence between Europe and the applicant’s home jurisdiction will need to be established, key criteria include comparable prudential legislation, equal access to markets, and a tax information-sharing agreement. Capital requirements and leverage restrictions will also need to be implemented. Local regulations will need to be effectively adjusted in manners outside current discussion in international regulatory forums.

The proposed directive will apply to all types of “non-UCITS funds”, including private equity, real estate, infrastructure, and hedge funds.

Michael Coleman, the Chairman of the Singapore branch of AIMA, commented: “The effect, if not the intent, of this directive is highly protectionist. If it is left unchanged it will have a major negative impact on the hedge fund industry in Singapore, which has a large European component to its investor base. Also, it will have negative consequences for European investors who will find their choice of investment opportunities severely restricted. ”

This will have an adverse impact on Singaporean investors with European funds or managers. Due to the restrictions imposed, compliance costs will increase and returns will lessen. European investors will also suffer from the higher costs passed on to them and face a diminished investment universe.


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Singapore keeps top spot in expat survey, HK slips

Good news for the weekend from Reuters for those living in Singapore.  It has retained its status as the best location for expatriates in Asia while Hong Kong has fallen behind Tokyo because of bad air pollution, an annual survey released on Wednesday shows.

Singapore was ranked the best location for the 10th straight year, followed by Japanese cities Kobe, Yokohama and Tokyo, according to the survey by London-based ECA, which ranks cities by climate, air quality, health services, housing and personal safety, among other categories.

“Good infrastructure and healthcare facilities, low crime and health risks, and decent air quality contribute to Singapore providing the best quality of living for Asian assignees,” said Lee Quane, Asian director of ECA International, which advises on expatriate packages and allowances.

The survey aims to help companies establish expat allowances. Companies may be seeking to slash expat packages during the global economic downturn but ECA said only a handful of cities in Asia offer expatriate staff a good standard of living.

Most of the 49 Asian locations ranked remain challenging for one reason or another, and therefore, warrant high location allowances, it said.

Top 12 Asian locations for expatriates: (last year’s rankings in brackets)

1. Singapore (1)

2. Kobe, Japan (2)

3. Yokohama, Japan (3)

4. Tokyo (5)

5. Hong Kong (4)

6. Taipei (6)

7. Macau (7)

8. Kuala Lumpur (9)

9. Bangkok (8)

10. Georgetown, Penang, Malaysia (9)

11. Shanghai (11)

12. Seoul (12)


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US authorities are probing NIR Group hedge fund based in US/Singapore says WSJ

Reuters has reported that, according to the Wall Street Journal, the U.S. authorities are probing whether Corey Ribotsky, Managing Member of NIR Group, a New York & Singapore based hedge-fund, defrauded investors about their returns and the holdings of his various funds, citing people familiar with the matter.

The people told the paper that prosecutors from the U.S. Securities and Exchange Commission, Federal Bureau of Investigation and the U.S. attorney’s office in Brooklyn are looking at whether Ribotsky lied to investors as stock prices fell during the credit crisis. The paper said the authorities have not accused Ribotsky of wrongdoing. Ribiotsky has said he has $770 million under management.

Ribotsky’s lawyer declined to comment to the paper, saying the hedge fund manager and NIR “have no knowledge of any criminal investigation and have not been contacted by any authorities.”  Spokesmen for the SEC, FBI and U.S. attorney’s office declined to comment to the paper.


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Most hedge funds failed to make money in June

From Reuters, Singapore.  Most strategies employed by hedge fund managers globally failed to generate positive returns in June as stock markets moved sideways and commodity prices slid during the month, according to estimates from Lipper on Tuesday.

The best-performing hedge fund strategy was “convertible arbitrage” which returned 0.28 percent, while the worst-performing strategy was “managed futures” which lost 1.59 percent. Long/short equity hedge funds declined 0.23 percent.

Overall, nine of the 13 strategies tracked by Lipper lost money last month.

“Managed futures managers were hit in June by the lack of a clear trend as intra-month volatility spikes resumed across a number of asset classes,” Lipper’s global head of hedge fund research Aureliano Gentilini said in a report.

Commodity prices fell in June, with the Reuters/Jefferies CRB Index .CRB declining 1.22 percent, as gains in industrial metals and energy were offset by losses in agricultural, soft commodities and precious metals, said Lipper, a unit of Thomson Reuters.

Hedge fund managers have come under increased scrutiny since last year due to their failure to generate positive returns in bear markets as they are supposed to, resulting in outflows from the industry. Many observers say, however, that withdrawals are easing and managers could see inflows before the end of 2009.

Strategies used by managers include arbitrage, which typically involves exploiting different valuations of what is essentially the same underlying security such as the price of a stock and its price in the forward market.

Managed futures traders, on the other hand, focus on trading futures contracts in areas such as metals, grains, stocks and currencies.


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Deutsche Bank official reflects on the impact of the financial crisis on Asian wealth management

From The Business Times, Singapore comes news of the impact of the firestorm which hit the global financial industry, wiping out some US$3 trillion in market value, on one area, wealth management, which was particularly impacted .  Huge asset values – especially in structured products – were wiped out overnight.

Mr Raju: Says this is a US-led crisis, and Asia remains largely intact

‘All this hit suddenly after a good run for over a decade,’ noted Ravi Raju, head of Deutsche Bank Private Wealth Management Asia Pacific. ‘No one expected a huge chunk of the market to be wiped out overnight.’  Private banking clients saw their net wealth shrink substantially.

According to a recent Merrill Lynch-Cap Gemini report, the combined wealth of the world’s high net worth individuals (HNWIs) – defined as those with investible assets of US$1 million – fell 19.5 per cent to US$32.8 trillion in 2008, but should recover to US$48.5 trillion in five years. The ultra-HNWIs – those with investible assets of more than US$30 million – suffered an even sharper drop of 24.6 per cent in combined fortunes.

Meanwhile, the banks themselves – having built up huge fixed costs in investments in facilities, people and technology – were suddenly faced with shrinking margins.

According to Mr Raju, the root cause of the problem was insufficient regulation of exotic products, lack of training of the people who sold them, and poor product knowledge by the people who bought them.

‘Over the past two decades there has been such explosive growth that the industry over-expanded. There was also too much fixed investment and hiring of too many client advisers without the requisite training. Banks created and sold structured products without adequate control or oversight.’

The situation was particularly bad for the mass affluent market, or those with some US$500,000 in investible funds.

But the worst may be over, at least for Asia, said Mr Raju: ‘This is a US-led crisis, and Asia remains largely intact. In five years, when we look back, this will seem like a blip in Asia’s growth supercycle. The Asia-Pacific remains the manufacturing and entrepreneurial centre of the world.’

And Deutsche Bank’s (DB) private banking franchise is focused on this niche.

‘Entrepreneurs spend 95 per cent of their time on their business. So we offer solutions in investment banking and advisory work, then bring in our wealth management capabilities,’ Mr Ravi explained.

‘We do not compete directly with the Swiss boutique banks in Europe, which deal largely with the old money establishment. In Asia, much of the wealth is one or two-generational, and largely in the hands of entrepreneurs.’

He said the value proposition of DB’s private banking franchise was its capability to offer an array of banking services onshore: ‘DB is very much embedded in Asia Pacific. We have an onshore presence in virtually every market. So our strategy is somewhat different from the others. It enables us to forge closer partnerships with the growing numbers of entrepreneurial wealthy across Asia.’

Though smaller than the Swiss banking giants, DB’s private banking franchise is far from small.  ‘We have almost 20 billion euros (S$40.8 billion) under management in the Asia-Pacific,’ he said.

This is about 11.6 per cent of DB’s global portfolio of 165.1 billion euro, and has grown from Dec 31, 2008’s 18.4 billion euros.  With demand for wealth management still growing in the region, Mr Raju sees Singapore and Hong Kong remaining the two biggest Asia-Pacific booking centres for private wealth.

‘Singapore in particular has all the right ingredients – regulatory structure, talent, institutional framework – to emerge as a global leader in wealth management.’

But retaining this lead will require more emphasis on the quality of its wealth managers, he added.

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