Asia continues to lag other regions for integrating ESG principles with investing; better data and stronger regulatory requirements will help institutional investors, market observers say.
The fund attributes this performance to keeping the portfolio nimble and maintaining a trading approach. In addition, its focus on large-caps has helped as mid-caps and small-caps have suffered in the summer months, together with its decision to stay short in India, Korea, Hong Kong plus making the right directional call on commodities and financials.
The investment advisor for the fund is Progress Capital Pte, which is based in Singapore. Vikas Gattani is the managing principal. Before starting this fund, he headed proprietary trading desks in several banks. In his last role, he set up and ran an internal hedge fund at JPMorgan. The COO is Mo Paul who has a background in product control and risk management at CS Financial products and Deutsche Bank.
The fund's strategy is Asia-Pacific ex-Japan equity long/short. It takes a top-down view on markets, sectors and large-cap single stock names running a dual thematic and macro investment approach.
"Our thematic approach is a volatility-adjusted, delta-neutral strategy with alpha characteristics, and the macro is an opportunistic and directional approach with beta characteristics," says Paul. "The large-cap focus helps the fund to be nimble enough in the treacherous markets that weÆve seen of late."
Over the 11 months since inception, the thematic approach has generated a return of approximately 1.1%, while the macro approach has lost about 3.9%. As over 90% of the portfolio is invested in large-cap names, this has meant that the geographical speciality of the fund inevitably veered towards the bigger markets and excluded second-tier Asian countries by virtue of the fact that large-cap stocks don't proliferate there.
The fund charges a 2% management fee and a 20% performance fee and offers monthly redemptions with 45-days notice.
It is currently trying to build assets to reach a soft close at $300 million. In normal market conditions, it targets net returns of +15% on volatility of 10% or lower.
Service providers are Goldman Sachs and Merrill Lynch as prime brokers and Citco as fund administrator.
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