The Canadian pension fund plans to increase its allocation to the region from 10% to 15% over the coming four years, even as its total assets under management rise.
It follows in the footsteps of the $42 million Australian long/short fund, which this year is flat in Australian dollar terms versus a 23% fall in the local index. That fund is net long only, but the new Asian fund will also take short positions.
Platypus Capital Management was founded by co-portfolio managers Derek Sicklen, Chris Talbot and Charles Magri. They are applying a systematic long/short strategy using computer-based algorithms to select stocks based on liquidity, volatility and momentum. However, it is not a classic æblack-boxÆ-style quant fund as it does not conduct ratio or fundamental analysis.
Completing this process is a qualitative overlay which establishes if there is, say, a corporate action or lack of availability which makes a trade too hard to accomplish, in which case a stock is stricken from the record. However, there is no provision for adding in stocks at that late stage that the computer model has not already unearthed.
Aiming at large-cap and liquid stocks, the Platypus Asian Equities Fund will confine itself to trading Japan, Korea, Taiwan and Australia. Exposure will be segregated per country, with a maximum gross exposure per country of 300% and maximum net exposure of 100%.
Target returns are high teens to low twenties, on volatility of 10%. Fees are 1.5 % management fee and 20% performance fee. There is no lock up and monthly redemptions require one month notice.
The fund will be split into different segregated multi-investor portions, each one with different hedging, gearing and currency characteristics, depending on investor preference. Initially, the fund has been seeded by a Swiss bank whose identity is being kept private.
Service providers are UBS as prime broker, Citco as administrator and PricewaterhouseCoopers as auditor.
They have teamed up with each other and with overseas investors to boost investment capacity in real estate and infrastructure investments in Europe and North America.
Asset owners across Asia Pacific weathered some difficult market conditions in 2020. While most emerged from the year successfully, some notable exceptions suffered asset drops.
Thanks to the current rise in yields, the key return driver of the bond market is set to change but its bull run will very likely continue.
Asian institutional investors were generally more optimistic about post-pandemic economic recovery but only 33% were confident about achieving their short-term objectives.