The $1 billion fund-of-hedge-funds company Persistent Asset looks like upholding its record of never having had a down year for its flagship funds Persistent Edge Asia Partners and Persistent Edge China Partners.
This year also looks like being a positive one for its third product, Persistent Edge Global Partners. (Except for a seven basis point drawdown for that fund in 2009, it too would have been in the black for every year of its existence).
In 2011, the China product is up 5.41% through to the end of September and Persistent Edge Asia Partners is up 2.49%. Persistent Edge Global Partners is up 4.4%. The latter fund is weighted towards managers in the US and Asia, with a Japan and China emphasis in the Asian allocation.
During September, the three funds were slightly down – the China fund was down one basis point, the Asia fund was down 1% and the global fund was down 1.7%.
September was a tough month for the alternative industry. Here are the year-to-date league tables for Asia-Pacific funds of hedge funds:
1) Persistent Edge China
2) Persistent Edge Asia
3) General Hedge Fund Sicav Long./short equity Asia Pacific
4) La Fayette Asia Fund
5) Permal Asian Holdings
6) Finles Lotus Fonds
7) JH Whitney Pan Asia Fund
8) Asian Capital Holdings
“We look for returns from managers with certain skill-sets and hedge out market risk by picking a portfolio of managers according to their edge,” says Xin Huang, managing director of Persistent Asset in Hong Kong. “If some managers are strong, for example, at picking longs, then we find managers to balance them who are skilled at shorting.”
At present, Persistent Asset's net exposure is zero. Asked what the optimal strategies are for hedge fund managers at present, he replies: “Long/short. There are others in long/short too, of course, but we just do it better,” he says.
“For example, China is the perfect playground for long/short. It’s a market where Western investors are sentiment-driven, and they either love it or hate it. But China is an economy experiencing such a lot of changes, there’s a lot of mispricing and price dislocations, which is ideal for long/short managers who are doing their homework.”