GLOBAL - Baring Asset Management has launched a new Asian fund of hedge funds as investors continue to look East for opportunities.
Baring’s Asia Hedge Select Fund will invest predominantly in equity long-short Asia Pacific hedge funds and be managed by Tom Maier, head of BAM’s alternative investment team. Fauchier Partners will advise on manager selection and strategy allocation across a 200-strong universe of funds.
Commenting on the fund, Maier said: “The investment case for the Far East markets, especially outside Japan, is strong. In China, the role of the state in the economy has declined sharply in many sectors and since joining the World Trade Organisation, key economic sectors have been opened up to free trade.
“This has acted as a catalyst for further reform, improved efficiency and long-term growth in both China and in the Asia Pacific region as a whole.”
He added: “The long manager who is contracted to outperform Asia finds that the relative risk they are prepared to take can be eclipsed by the absolute risk of the index itself. For the more risk averse, the appropriate investment strategy for these more volatile areas is one that includes absolute return investments.”
The new fund is expected to generate a return of around 7% above three month US Treasury bills over the long-term.
BAM anticipates that a growing portion of investment in Asia Pacific will be made through hedge funds to protect against the possibility of adverse returns, as seen in Asian crisis of 1998 .
By using between 10 and 20 funds with different investment styles, geographical preferences and risk profiles, BAM aims to keep manager correlation low and reduce overall volatility. Volatility is expected to be between 7% and 9% compared to 21% for the Pacific market over the past 20 years.
The minimum investment level is US$100,000 and is available to both individuals and institutions from May 1. The fund will be denominated in US dollars, euros and sterling.
BAM has significant experience in Asia and has a 3 year track record in running global funds of hedge funds in which it holds £310m assets.
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