Ex-Credit Suisse asset allocation strategist Dr. V. Anantha Nageswaran and his two ex-colleagues from the private banking team will launch the Singapore-based Libran Global Macro Fund during the fourth quarter of this year. While at Credit Suisse, Nageswaran made the calls on global asset allocation that helped the Swiss giant win FinanceAsia magazine's model portfolio game against three competing private banks in 2003.
"I felt that winning FinanceAsia's model portfolio game against other competitors really vindicated our approach," says Nageswaran.
Nageswaran says that the fund is set to kick off with $5 million to $15 million from friends, family and acquaintances.
The fund's strategy is fundamentals driven, and seeks returns by making directional bets on various asset classes, including equities, currencies, fixed income and commodities. The fund also seeks to generate additional alpha through bottom-up stock picking.
"The bias of the fund may vary from top-down to bottom-up, depending on our reading of the market," says Nageswaran. "For example, if top-down analysis goes into a trendless state then our bottom-up strategy will begin to take on more importance. Our fund takes a conservative approach, and capital preservation is extremely important to us."
Nageswaran emphasises that the fund's Singaporean base does not necessarily mean it will take an Asian bias. "One can effectively run this type of fund from anywhere in the world," he says. He notes that he would be more concerned about time zone differences if he were investing in US equities.
"Even if I became bullish on US equities, Asian equities would be even more attractive as they represent a leveraged bet on the US and Europe. We have on the ground presence and expertise in Asia that allows us to take advantage of this."
Speaking about his decision to leave his role at Credit Suisse, Nageswaran explains, "I feel that the financial markets, and particularly the equity markets, are in for a difficult time in the coming years. The straitjacket of a financial institution may not always allow me to live out my conviction and invest in an unbiased, disciplined and yet flexible way.
"For example," he continues, "there may be periods of time where I want my fund to be relatively inactive or remain in cash." He adds that from a personal perspective, it was time to move on. "There comes to point where one reaches the end of the road in an organization in terms of horizontal and vertical possibilities that can be achieved without incurring personal costs."
Nageswaran brings with him to the fund his two ex-investment consultants from the Credit Suisse private banking team. Keith Yong, a fixed income specialist, previously worked at Credit Suisse for five years covering G7 countries and Australasia.
SeokPeng Ang brings the Asian equity expertise, having spent over six years covering Asian equities with the team. The team will soon add an individual dedicated to risk management and is also looking to add a trader with a currency or commodities background to round off its skill set.
The fund's targeted returns are between 8% to 15% per annum. "We are now entering a bear market," says Nageswaran. "If we can make high single digit to double digit returns with low volatility, we'll be pleased."
The fund charges a 1.5% management fee and 15% performance fee, below the prevalent industry standard of 2% and 20%. "I like to surprise on the upside. In the early days, I think it is only fair to charge clients who invest with us a more reasonable rate."
The fund has appointed UBS as its prime broker and HSBC as its fund administrator.