In late summer 2008, Woori Investment & Securities based in Seoul, Korea seeded two new multistrategy hedge funds managed by the investment management firm Woori Absolute Partners which is based in Singapore. It was the first time that an offshore hedge fund has been backed by a Korean financial institution.
During their first months of life, returns from both Cayman Islands-domiciled funds fluctuated between slightly positive and slightly negative with both funds ending 2008 with a slight positive return. With March 2009 alleviating the downward pressure and both funds expected to post positive gains of approximately 1.5%, they are both cushioned in the black for their short lives to date.
Woori Investment & Securities provided the initial capital of $100 million; $5 million for working capital, $60 million went to the Woori Absolute Asia Multi-Strategy Fund and $35 million to Woori Absolute Global Opportunity Fund. The target size for the funds is $500 million each.
The former fund covers pan-Asian liquid markets and has four sub-strategies -- equity long/short, relative value and arbitrage, volatility and event driven. The latter fund's geographical scope is G7 and Asia-Pacific markets and its strategies are relative value/arbitrage, global macro and fixed income/foreign exchange volatility.
Fees for both funds are 2% management fee and 20% performance fee, there is monthly redemption with 30 days notice and no lock-up. However, there is a 2% penalty fee for withdrawals in the first year and a 1% penalty for withdrawals between year one and the beginning of year two.
The funds target returns of 10%-15% per year on annualised volatility of 7%, though month-to-month volatility has been under 3% since inception of both funds. The funds can use leverage, but currently don't avail themselves of any borrowing. Gross exposure is currently approximately 65%-85% and net exposure ranges from negative to positive 10%.
The CIO of the fund is James Kim, who used to be the head of global prop trading at Woori Investment & Securities, and before then worked at Goldman Sachs, Citi and Morgan Stanley. He concentrates on the Absolute Asia Multi-Strategy Fund and is assisted on the Global Opportunity Fund by KC Song, who also worked at Woori and before then was at Deutsche Bank. Heading research is Daniel Yoo who is a former Citi colleague of Kim. Heading marketing is Edward Moon who is also a former colleague of both Kim and Yoo and has prior experience at Credit Suisse.
Service providers are Credit Suisse and Deutsche Bank as prime brokers, HSBC as administrators and Imagine as risk software providers.