11 Apr 2005
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| Strategy for global hedge funds and alternative
investment |
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Hedge fund with zero management fee to launch in
Singapore
23 Mar
2005 |
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A USD 100 million hedge fund targeting
annual returns of 24 to 36 per cent is to be launched in Singapore
in June by Commerz Capital International.
Commerz Capital says two main factors
will set the new fund apart from others in the industry – greater
transparency and zero management fees.
Investors will able to
login and see daily updates of all the trades executed by the fund,
providing full transparency in how it is managed, while Comerz
Capital will not levy any management fees.
“In the last two
years, 60 per cent of new funds launched were in Asia-Pacific and
the hedge fund industry in this region is estimated to be worth USD
60 billion,’ said Kishore M, CEO and principle of Commerz Capital.
“To fully realise its potential, we need to demystify the perceived
‘high risk’ associated with hedge funds, which in reality, and
statistically, are often less volatile than a conventional portfolio
of equities and bonds.”
“Commerz Capital is well placed to
enjoy a fair share of the market,” he added. “We have an excellent
track record and our intended strategy to be transparent with our
investors will appeal to high net-worth investors who want to know
more about how their funds are managed.”
Commerz Capital is
registered with the Monetary Authority of Singapore as an exempt
fund manager. The company selected Singapore as the preferred
location for the launch because of the government’s support for the
industry and its efficiency in the registering of new funds. Kishore
also trades his own account under his proprietary company Futures
Capital Holdings, which recorded a performance of 99.05 per cent
return (2003-2004) attested and certified by Ernst &
Young.
“Hedge funds are fast gaining popularity amongst the
investment community and there are market watchers who are concerned
about the perceived relaxed regulatory environment surrounding hedge
funds,” said Kishore. “The industry needs to do its part to build
credibility and avoid another Nick Leeson incident in the financial
sector. For a start, fund managers should be more transparent about
how they manage the funds.”
Apart from Kishore’s personal
objective to take on bigger challenges, the idea to start a new
hedge fund was mooted because of encouragement from business
associates and acquaintances, since they have benefited
substantially by implementing the strategies for their own
portfolio.
The hedge fund will have an asset allocation of
75 per cent in options and the remaining 25 per cent in shares and
futures. The strategies will be implemented in the US, UK, Japan and
Australia markets. In addition, stocks of only the US markets will
be bought however derivatives will be on currency, gold,
commodities, treasury bonds, US Indexes (S&P500), ETF (QQQQ),
Japan Index (NK225), UK (FTSE) and Australia (SPI200).
Other
benefits of the fund include access to the money managers, no entry
or exit fees, a target to achieve absolute returns and not peg to an
index benchmark, investment strategy focus on consistent returns and
preservation of capital, no lock-in period, and experienced money
managers who will be investing their own funds.
HedgeMedia.com
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