Singapore Hedge Fund

Alternative asset management in Singapore

Asian hedge funds fall 0.4 pct in August but up 13.1 pct in 2009

Asia-focused hedge funds fell 0.4 percent in August after five straight months of gains, pulled down by sharp declines in China, Hong Kong and Taiwan shares, hedge-fund tracker Eurekahedge said.

Japan hedge funds edged up 0.7 percent, North American funds rose 1.8 percent, Latin American funds gained 2.1 percent and European funds returned 2.6 percent, the Singapore-based firm said in a statement received on Wednesday.

Asian hedge funds have gained 13.1 percent since the start of the year, after a 20.3 percent drop in 2008, according to Eurekahedge, which said its estimates are based on preliminary data.

Eurekahedge also said in its statement that hedge funds globally attracted net inflows of $4.5 billion in August, with over 50 percent of funds tracked by the firm reporting new inflows from investors.

Globally, all hedge fund investment strategies showed positive returns in August, led by funds investing in distressed debt which returned 6.23 percent average, Eurekahedge said. The weakest performers were commodities trading advisers and managed futures funds, which returned 0.5 percent.

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Fullerton aims to extend Singapore’s reach by wooing the European investor

The city state of Singapore punches well above its weight in the world of investment. Between them Temasek Holdings and the Government of Singapore Investment Corporation, the tiny nation’s twin sovereign wealth funds, manage an estimated $400bn (£245bn, €280bn) of assets.

But Singapore is not resting on its laurels; it is about to wade into the congested European asset management industry as part of a plan to raise its assets under management higher still.

Fullerton Fund Management, the funds offshoot of Temasek, currently manages just $2.3bn of external money, in addition to the assets of its parent.

But Fullerton hopes to bolster this tally by launching its first European Ucits funds via the migration of two existing vehicles from the Cayman Islands to Luxembourg before the end of the year.

Gerald Lee, chief executive and founder of Fullerton, believes the move is essential to crack the European market, which currently accounts for just 5 per cent of its customer base.

“We have funds registered in Singapore as well as in the Cayman Islands but there’s just no way we can penetrate the [European] market, if the fund structure is not right. We realise that if we don’t put funds on a Ucits platform we can be marketing here every day, but we won’t get a single cent.”

Fullerton’s initial offerings will reflect its expertise in Asian securities, but with an interesting twist. One fund, Fullerton Asian Equities, is a straightforward relative return product. But the other, Fullerton Absolute Return Asian Equities, is a market timing vehicle which allows the manager significant freedom to switch between equities and cash in anticipation of market rallies and slumps.

Mr Lee is adamant that his managers are able to time the markets in this manner, in spite of the fact that many of the world’s most successful equity managers say such timing abilities are beyond them.

“The whole idea is to take away enslavement to the index. We discover that the moment you do that, actually equity managers do have a very great sense of market timing, contrary to popular belief,” says Mr Lee, who was head of fixed income sales at SBC Warburg Singapore and deputy chief investment officer at Deutsche Asset Management Singapore prior to joining Temasek in 1999.

“I come from a fixed income background, I spent my years in a business as a fixed income manager, so I always found it very perplexing that equity managers claim that they don’t know how to time the market.

“Here I was trading bonds and managing bond portfolios knowing that, actually, it’s not a very difficult call. You don’t need to be somebody with high IQ, you just need to have a very good sense of what is happening.

“You always know when the market is overbought and you know when the market is oversold. Equity managers are capable of market timing and we want to put that to good use.”

Even armed with this information, picking turning points is notoriously hard. During the latter stages of the 1990s bull market, many managers were all too aware that a host of technology, media and telecoms stocks were wildly overvalued, but those managers brave enough to exit these sectors suffered as the TMT bubble continued to inflate, and in many cases lost their jobs as a result.

Mr Lee is aware of the difficulties, but believes the answer is to mandate absolute return managers to beat deposit rates by 5 to 7 percentage points a year over the cycle.

They are likely to exceed this in a bull market, even if they have not participated fully in the rally, giving them the freedom to bail out without being fearful as to their future employment prospects.

“The absolute return guy actually knows how to take money away from the table when things are overheated,” argues Mr Lee. “Where he really adds value is when the market starts falling apart and he has everything very nicely in cash.”

According to Mr Lee, Fullerton first trialled market timing with some of its equity managers five years ago, and the experience has been “very pleasant”.

However, the experience of the Fullerton Absolute Return Asian Equities fund since launch in 2007 has been somewhat less pleasant. During 2008 it lost 37 per cent, against a 52 per cent drop in its underlying Asia ex-Japan index.

Mr Lee largely blames investors for this state of affairs arguing that, with the fund launched during a bull market, investors were unwilling to accept Fullerton’s recommendation that the “neutral” equity weighting should have been 30-50 per cent and instead insisted neutral should be 70 per cent.

“They wanted to have their cake and eat it,” he says.

Fullerton also has plans to go after US investors, but these are unlikely to be firmed up until next year at the earliest, when it is able to start learning some of the lessons from its European push.

In spite of the imminent migration of two of Fullerton’s vehicles from the Caymans, Mr Lee is reluctant to sound the death knell for the Caribbean offshore financial centre, which some see as a potential loser from moves by the US and Europe to stem tax avoidance and tighten regulation of the financial system.

“There is a critical mass of excellence in the Caymans, in terms of people knowing the legal and administrative aspect, so I think they continue to have the advantage,” he says.

Yet, following budget changes in February which improved the tax treatment of funds in Fullerton’s home market, Mr Lee adds: “I can see that more and more hedge funds domiciled in Singapore may not find it necessary to incorporate their funds in Cayman as before.”

Further change may be afoot for Fullerton, however. Last month, Temasek said it would be prepared to list some of its biggest holdings, such as port operator PSA and Singapore Power, adding that even Fullerton itself could be suited to a float.

http://www.ft.com/cms/s/0/42d49b3c-9979-11de-ab8c-00144feabdc0.html?nclick_check=1

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Boris tries to save london's first place!

Boris Johnson

Boris Johnson

Mr Johnson was there to argue against “enormously damaging” plans to tighten regulation, saying that it would drive jobs in the capital elsewhere and cost the UK billions in tax revenues as business relocated to other financial centres such as New York and Singapore.

“After a series of meetings I am confident we have successfully made a concrete and sensible argument,” the Mayor said. “Amongst the British MEPs I met, there was widespread recognition of the potentially damaging effect that the directive, in its current form, will have on London, the UK and Europe. I was encouraged by MEPs to continue to lobby for the modification of the directive.”

Mr Johnson said that he had a “very friendly, warm and constructive” meeting with Charlie McCreevy, the EU Commissioner responsible for the regulation of financial services.

“Commissioner McCreevy realises the importance of the capital’s financial services industry to London, as well as Europe, and recognises that the directive will be, and should be, amended as it makes its journey through the European Parliament. He encouraged us to continue to play our part in this process and I fully intend to do so,” the Mayor added.

He has maintained throughout that the draft directive is unduly harsh on hedge funds and private equity, which he says were not to blame for the financial crisis. He said he is in favour of “proportionate regulation” but argued in its current form it would cut off a vital supply of investment funding from an industry which currently employs 7,000 people directly in private equity in London and a further 35,000 directly and indirectly within hedge fund management. About 80pc of European hedge funds and 60pc of European private equity funds are located in London, according to the Mayor.

The Alternative Investment Fund Management draft directive was published by the European Commission in April. Mr Johnson has dismissed the plans as protectionist and anti-competitive, and claimed they display ignorance about the workings of the industry.

He has argued that the correct thing to do would be to regulate at the global level through the G20.

JVB with the telegraph

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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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Event at Singapore Management University on the "Past, Present and Future of the Hedge Fund Industry" – 28/29 October

The annual two-day Hedge Fund Executive Education Programme, which will take place on the 28th and the 29th October 2009, is modeled after the Hedge Fund Training Programme at the London Business School. It will be open to players with interest in the Hedge Fund Industry such as investors, private bankers, finance practitioners, and professionals seeking a career in Hedge Funds. Seminars will be delivered by professors from the London Business School and SMU, and will focus on areas such as hedge fund risks, investment strategies, and performance. To aid learning, the course will feature real world case studies (LTCM, Amaranth, Harvard Endowment, etc), presentations by hedge fund managers, and discussions by professional hedge fund investors.

Selected Speakers

Bill Fung
Professor,London Business School

Melvyn Teo,
Associate Professor,Singapore Management University

Anurag Das¸
Founder and Managing Partner, Rain Tree Capital Management

Tan Chin Hwee
Partner, Apollo Fund Management

Singapore Management University

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

From efinancialcareers.sg, 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.

efinancialcareers.sg

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Singapore Offshore Banking

Here is a good piece I found on mrxpat.com about law, regulation and banking in Singapore…

Singapore has double taxation treaties with more than 40 countries, including Belgium, the Netherlands and Luxembourg. . This makes it an interesting place to set up a holding company. . A European entrepreneur who brings his business in a Singapore holding company can enjoy a much more favorable tax regime.. The cost of setting up a company in Singapore soon amount to several thousands U.S. $.  Singapore is located in the heart of Asia, and is the largest banking center in the region. The infrastructure is among the best in the world with digital telecommunications, and a world class airport.  The banking laws are strict and Singapore is a huge success as a center for offshore funds. The regional property market relies more and more in Singapore. thanks to a good legal high skilled labor and tax benefits.  Trusts are less in use, but Singapore would change and offshore trusts are not taxed. In 2003, the tax reform, new tax incentives for investment funds, insurance companies and damage the futures market.  The business tax was reduced as both simplified and tax abolished. A real business transaction, however, settled by means of shares, is normally charged. Singapore also known wealth, customs duties, stamp tax and social contributions. The number of disks for personal income tax was reduced from 10 to 7, and the highest disc is dropped to 20%.  Company tax was 1% down to 32%. The government estimated the cost of these measures in more than 600 million singapore dollars. tax system operates on a territorial basis, meaning that income from offshore investments that are not returned to Singapore, are not taxed.

Companies in the financial sector also enjoy tax exemptions or lower rates for offshore. Banks and insurance companies pay scale 10% tax on offshore activities instead of 32%, except for life insurance. Also custom switching trust companies and trade in bonds enjoy the lower tax regime, and there are tax incentives for their data processors.  Interest on loans from foreign banks and companies can be deduced. In some years, the number of hedge funds in Singapore tripled. Eighty percent of the investment in a hedge fund should come from outside Singapore to qualify for tax exemption. . Managers of a hedge fund are taxed at 10% of their fee. Leaders in the sector, the government asked those rules ensuring a favorable climate for hedge funds to continue to insure. Since 2004, international investment funds no longer required to have an office in Singapore.  They can do business through a bank. Managers of more than S $ 5 million, for a period of five years exempt from tax on their fees. If the activities of the fund in Singapore to grow enough, this period for another five years. Tax on profits of the fund can be deducted from the 20% of dividends paid to shareholders are taxed. Gains made by financial firms for their clients are in many cases tax. Singapore’s competitors in the field of financial services in the region, Tokyo and Hong Kong, where rents the highest in the world. Singapore hopes some of their customers to attract a lower price. It was in this context that the government decided to make an exception to the territorial tax principle and the advantage as long as parties are foreigners, trusts completely exempt from tax.

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Tribridge To Launch New pan-Asia Hedge Fund

Tribridge Investment Partners Ltd., a Hong Kong-based hedge fund manager, said Monday it will launch a new fund in August and hired John Liptak, former head of Bank of America Corp’s Asia special situations group, to run it.

The new fund will have a pan-Asia focus and seek to identify mispriced or undervalued securities due to financial stress, some corporate event or other special situation. It will be biased toward large-cap companies in more developed markets in the region such as Hong Kong, Australia, Korea, Singapore, or Japan.

“I believe that the opportunities from the upcoming default cycle have not been seen since shortly after the Asian currency crisis back in 1997-1998,” Liptak said in prepared remarks.
Citigroup. is the fund’s prime broker and Bank of New York Mellon Corp. is the administrator. Tribridge, founded in 2003, has US$259 million in assets under management in four different funds including a Korea multi-asset fund and three credit funds.

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London Mayor: Hedge Fund might leave London for Singapore

We are Migrating the blog here: http://singaporehedgefund.com – faster, better,bigger…….

I know, it sounds like a tabloid headline but basicaly not too far from the truth 🙂

Mayor warns EU not to strangle world’s premier financial centre

The Mayor of London, Boris Johnson, today called on the Government to help him resist the EU Commission’s dangerous plans to regulate financial services. He fears that the plans could threaten London’s status as the global capital of financial services, and will result in European investors losing out and seriously damage the capital’s financial services industry. The Mayor fired off his warning directly to Lord Mandelson as he addressed a major economic conference in London, attended by both the Business Secretary and Shadow Chancellor, George Osborne.

Boris Johnson told delegates that he is so concerned he has sought an urgent meeting to personally lobby EU Commissioners and make the case for London. He singled out the EU draft directive on Alternative Investment Fund Management as a measure that would seriously weaken the European marketplace for hedge funds, private equity and venture capital. It will substantially reduce the choices available for investors, put up protectionist barriers around Europe, and give a huge competitive boost to financial centres outside the EU, such as New York, Singapore, Hong Kong, and Geneva – to Europe and London’s ultimate disadvantage.

In London alone, the private equity and venture capital industry directly employs around 7,000 people and it is estimated a further 35,000 people are employed directly and indirectly by hedge fund managers.  The industries are overwhelmingly based in the capital, with 80 per cent of European hedge funds and 60 per cent of European private equity funds located here. Sources close to the hedge fund industry estimate that their tax contribution alone is around £3 billion per annum. More importantly, many commentators, including EU Commission’s influential report by Jacque de Larosiere, have agreed that the hedge fund industry combined with other alternative funds do not pose a material systemic risk to the financial system as a whole.

The Mayor said: “I support strong and sensible regulation of financial services to prevent a recurrence of the financial crisis that everyone in Europe is now suffering. However, in my book this means regulating at the right level. As financial services are a global business, this must be set at a global level by the G20.

“My greatest worry is that this is just the start of a flood of draft directives that will start to filter out of Brussels. London is the home of hedge funds and private equity, but having a strong hedge fund and private equity industry is not just good for London, it is good for Europe. No other European city’s financial services sector is competing on the same international level as London, and the EU Commission must recognise this. That is why I’ve decided to personally take the lead on this and lobby key figures. London’s main competitors are outside the EU, including New York and Hong Kong, so it’s blatantly obvious that this unilateralist approach will damage our competitiveness.”

The Mayor is keen to ensure that any European regulation of the financial services industry appreciates that London is competing with international cities such as New York, Geneva, Hong Kong and Singapore. As a result the Mayor is calling for more effective international regulation that works across all of the capital’s competitors and for draft EU legislation to assist, not cut across, those efforts. He is encouraging the government to engage much more swiftly before these directives are issued so that the regulation is right for Europe, the UK and London.

The Mayor’s comments were part of a speech on his proposals for London’s economic development, set out in Rising to the Challenge, published in May. The conference, organised by the London Development Agency, is bringing together over 300 leading politicians, business people, commentators and policy makers to discuss and debate the key issues facing London’s economy and to help develop solutions to shape the future of our capital.

In his speech, he called for London to promote more powerfully its position as the world’s undisputed capital of business and ensure that central government work with the city to help keep the capital highly competitive in future. He committed to maintain London as a world-leading low carbon capital, undertake initiatives to improve Londoners’ skills and employability and to continue to invest in projects for London’s long-term economic growth.

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New Views of the Hedge Fund Industry…

We are Migrating the blog here: http://singaporehedgefund.com – faster, better,bigger…….

From our good friends at State Street, here comes their latest report on the Hedge Fund world.

Two major trends are emerging in the hedge fund industry with far-reaching impacts: a migration among the maturing hedge fund industry to third-party administration, custody and specialized services, and the most comprehensive reconsideration of financial regulations in generations. Today’s institutional investors need to understand the ramifications of these trends and participate in shaping the new structure of this critical, but evolving industry.

The global financial crisis is bringing about an evolution in hedge funds that will render significant changes to the industry. Record investment losses and investor withdrawals have cut assets under management by more than one-quarter, consolidation is under way, and both investors and regulators are calling for greater transparency.
The Evolution of an Industry

Two major trends that will have far-reaching impacts are emerging: a migration among the maturing hedge fund industry to third-party administration, custody and specialized services, and the most comprehensive reconsideration of financial regulations in a generation. According to State Street’s annual hedge fund study conducted in October 2008, 84 percent of institutional investors surveyed expect more frequent disclosure of hedge fund positions, while 49 percent anticipate more frequent reporting.

Before the dust from the crisis settles, it will be important for all of the stakeholders in this market to understand the ramifications of these trends and to participate in shaping the new structure of this changing industry. Though forever altered by current market conditions, hedge funds will retain their critical and proven role in institutional investors’ financial portfolios.

You can download the full Document here.

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