Three ex-Swiss bank currency traders have teamed up to launch the Rhicon Global Forex Fund, a hedge fund headquartered in Singapore and focusing on G7 currencies. It is one of very few pure currency hedge funds in the region and has launched in particularly difficult market conditions.
Following the meltdown caused by the September 11 attacks on the US, the fund opened with a small $1.5 million in investments from private individuals but the fund's managers, Rhicon Currency Management (RCM), soon hope to be handling large discretionary accounts for some European banks. The first such account is likely to be worth $50 million.
The fund applies a discretionary technical trading methodology that combines momentum based Commodity Trading Advisor (CTA) with the flexibility of a traditional global macro fund. The focus is primarily on G7 currencies and major crosses in the spot foreign exchange markets.
Christopher Brandon, one of RCM's founding principals, says the trading approach is aimed predominantly at capturing profits from short-term volatility in these markets, but that the fund also plans to profit from longer-term market developments.
"There are many CTA funds that have focused on trying to capture big 5% to 10% shifts in the market," says Brandon. "But for fund of funds or those investors with high exposure to currencies, this gives them highly correlated returns. We are looking for shorter-term momentum trading and capitalizing on moves of 1% to 3%."
Brandon says the team chose Singapore as a base because of the favourable regulatory environment. "The market here is well regulated but, at the same time, very flexible. We have had good access to the Monetary Authority of Singapore which is really trying to promote the hedge fund industry. And there are also tax incentives to set up here."
While the global forex fund has only recently been launched, Brandon and his two colleagues, Peter Jacobson and Ryan McLaughlin, have been trading their own proprietary funds for the past two years under the name Forex Technicals. Forex Technicals has achieved an annualized cumulative return of 83.26% since its inception in April 99 and recorded losses in only two of 21 months of trading. It has traded with an implied leverage of five times.
RCM trades on a 24-hour clock from three offices in Singapore, Geneva and Canada.