Asian hedge is open to existing clients until track record is proven
The GAM Asian Hedge Fund is to be gradually made available to GAM's existing long-only clients, following its launch earlier this month.
The long/short fund, which at the moment is being run with $5m of internal assets, will be introduced to other investors once the fund has a proven track record.
GAM Asian Hedge, which began trading on 5 November 2001, is managed by a team of three: John Mytton, Michael Lai and Inez Chow.
Mytton, who is based in GAM's Hong Kong office, said: 'The core markets for the fund are likely to be Australia, Taiwan, Korea, Hong Kong and Singapore. This reflects the fact you can do more in those markets as a hedge fund ' you can borrow stock or use the futures markets to hedge risk. In India, for instance, you can't borrow stock as easily. These five markets are very liquid and I sense we will be mainly concentrating on markets where we can borrow stock.'
The long portfolio will mirror the long-only Asian equity portfolios that both Mytton and Lai currently manage.
Mytton said the fund will be broadly market neutral and only take a slight long or short bias at any time. He said: 'We will not be taking aggressive bets ' I expect that stocks will make the largest contributions to the fund.'
The fund will aim to outperform the MSCI All Countries Asia Pacific (Free) ex-Japan Index and generate positive returns in negative markets, Mytton said.
His team will use a top down approach to determine country and sector exposure and stocks will be picked from a large-cap universe.
The GAM Asian Hedge Fund is dollar denominated and carries a 1.5% annual management fee, a 5% initial charge and a 20% performance fee. The fund is a collective investment vehicle domiciled in the British Virgin Islands.
GAM is not marketing the fund aggressively at the moment and will concentrate on building its track record. Mytton said: 'We want to ensure absolute and predictable returns for our clients. It has been difficult in the last two years to get good returns in Asia. This is an add-on product for us. We are a long-only fund management company and now we are providing our long-only clients with the opportunity to diversify risk by investing in products that can go long and short.'
Mytton is enthusiastic about the developing hedge fund industries in Asia. This optimism stems from two recent announcements. First, the Hong Kong Securities and Futures Commission revealed it is considering allowing hedge funds to be marketed to retail investors. The Commission has a consultation paper circulating until December 7 and will issue guidelines based on its findings next year.
Second, according to Mytton the Singapore Government Investment Corporation has reported that it is considering investing a proportion of its assets in alternative investment strategies. Mytton said: 'This will drive the development of the hedge fund industry in Singapore.' He emphasised these developments are at the early stage of a long process.
GAM currently manages over $13bn on behalf of its clients. It also manages assets in their 21 hedge fund products, including 14 multi-manager hedge funds.
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