Hedge Fund Intelligence HFI Hong Kong Report April 2014 | Page 14

HONG KONG 2014

HONG KONG 2014

updated only to September 2012. According to this
data – which market participants say will not have
changed dramatically over the past 18 months –
equity long/short strategies accounted for 33.1% of
the $87.1 billion managed by the 676 funds licensed
by the SFC in September 2012. Multi-strategy funds,
funds of funds and global macro contributed 30.8%,
11.2% and 8.3%.
Local bankers say that the emphasis on long-bias
funds in Hong Kong is in part a reflection of the
regulatory constraints on shorting in regional markets, especially the A-share segment.
Fredric Teng, COO of
Gradually, however, the universe of Hong KongOracle Capital
based alternative funds is becoming more diversi>> A game-changer for
fied, which is in part attributable to the demise of a
absolute return funds
number of long-bias China funds in the downturn
here would be if regional of 2008. “Long/short equity is still the dominant
strategy, but we are seeing more relative value, macinstitutions put aside
ro and credit funds being set up,” says Yoon at SAIL.
a pot of money specifically Long/short credit strategies accounted for just 2.7%
for allocation to Hong
of Hong Kong’s hedge fund assets as of September
2012, but are identified by some managers as one of
Kong-based absolute
the most exciting growth areas for the industry.
return strategies >>
The Hong Kong-based Prudence Investment
Management, for example, was set up in 2008
“to participate in the nascent Chinese credit market”. Its Prudence Enhanced
Income Fund, some 80% of which is invested in Chinese corporate credit,
saw its assets rise to $500 million by the end of 2013.
The longest-standing credit player of them all, however, is Income Partners
(IP), which was founded in 1993 by Emil Nguy and Francis Tija, with support
from minority shareholders Banque Privée Edmond de Rothschild and Lloyd
George Management. Today, IP is fully independent and wholly owned
by management, and manages $1.4 billion across a range of asset classes

with fixed income at the core of the business.
“Asia is equity-biased today, so imagine what it was like 20 years ago,” says
Nguy, who explains that when IP was launched, it was with the objective of
establishing itself as an independent market leader in Asian fixed-income
investment. It was a formidable challenge for several reasons. “The US fixedincome market was characterised by high liquidity, a deep investor base and a
stro