Enhanced Investment Products (EIP), the $250 million Hong Kong based fund house run by Toby Bland, has launched a new fund named the Asian High Yield Convertible fund, with initial assets under management of $17 million. This new strategy has a capacity of $300 million.
It is a long-biased fund designed to take advantage of high yields that currently prevail in Asian convertible bonds. The fund has a life of three years, monthly liquidity after one year and an automatic liquidation trigger with return of proceeds to investors when the net asset value increases by 70% from the start date.
Performance fees are only paid on realised profits. Target returns are 10% to 20% per year and no more than 20% of the fund will be invested in a single country or sector.
The fund will be run primarily by Yvon Choi who joined EIP recently, having worked at Elliott Advisers and Nomura. He also set up his own hedge fund called Middle Island Capital in 2008, but shut it down because of the turmoil and then joined EIP.
The flagship $25 million EIP Overlay fund was up 17.31% in 2008, in comparison to the MSCI Emerging Asia index which was down 54.09% in that period. The last two years of fund performance have produced a cumulative return of 44.18% The EIP Overlay Fund has a market neutral strategy abetted by a stock borrow arrangement from a sister index funds also run by EIP.
EIP launched another hedge fund known as the EIP Aleph Fund late in 2008. The Aleph fund promised a multistrategy approach, offering market neutral, relative value and volatility strategies. EIP also recently tied in with a seeding deal with Triple A Partners.