Rebekah Pang CFA, CAIA is head of Capital Introductions - Asia, Alternative Investment Solutions -Prime Clearing Services, Newedge Financial Hong Kong. Newedge has been established in the region for over 10 years, with Rebekah joining the team some five years ago. As a full service Prime Brokerage they service Hedge Funds across asset classes, building on a dominant position in the CTA space.
"We are very investor focussed" Pang says, "as a large amount of our business is through managed accounts we, by definition, align with investor requirements. The evolution of Capital Introduction started with investors asking for more suggestions on funds or by setting up CTA focussed programmes."
Pang sees growth ahead for Newedge as the Asian hedge fund universe diversifies in terms of strategy and Investor needs. "We are seeing more macro funds, more commodity funds particularly in Singapore and more of the types of funds we focus on" she says.
"There are a lot of long/short equity hedge funds based locally, and as these funds become multi-strategy adding FX and commodities, our portfolio approach to risk comes into its own. The product mix of our business has diversified successfully over the last two to three years to include a strong FX and equity franchise alongside our traditional strength in listed derivatives."
Pang reports that although it has been pretty tough on the whole performance-wise for Asian hedge funds over the past couple of years, there have been several notable successes. "Generally, most funds are still starting with friends and family money, before they do any investor marketing. Naturally the high profile start-ups make the press, but there are a lot of managers that have proved successful, but are still â€˜under the radarâ€™" she says.
Pang feels that Asian hedge funds offer a good blend of emerging, developed and frontier markets. "Certain strategies are difficult to grow in Asia Pac as you run into capacity issues" she says. "But we are seeing a lot of enquiries from investors outside of the region to meet local mangers. Without doubt, there has been a shift in the geographical focus of investment, with Asia pinpointed as a place to deploy capital with the potential to achieve more attractive returns."
Pang believes that Asian hedge funds should be up to the standard investors from overseas expect. "Investors from overseas are more demanding and funds need to be comparable to those in the US and Europe in terms of infrastructure, liquidity, transparency" she says.
A rising challenge to providing services to Asian hedge funds is the enormous amount of regulatory change currently being discussed. "Funds in the region need to make sure that they have the resources in place to guarantee compliance going forward. Almost on a weekly basis there is something new published by lawyers or consultants that, if nothing more, need to be read."
In terms of China, Newedge has an established joint venture with Citic and works on developing relationships with both onshore and offshore clients. "We are also seeing a lot of interest for funds that are trading China or looking for a Chinese partner."
Looking towards Australia, Newedge has also had a presence there for some 10 years. Pang says: "What I would love is if the local fund management industry in Australia got behind the local hedge fund industry more." Pang says local Aussie hedge funds sometimes suffer from both the tyranny of distance, added to fee sensitivity. The famous Aussie Superannuation funds arenâ€™t going to pay 2 and 20, and are, on the whole, not comfortable with the fee structure offered by funds of funds, she says. "The supers have a large amount of capital but are traditionally focused on private equity and infrastructure investments. There is a number of big investors who are supportive of hedge funds - just not all of them" she says.
This article was published in Opalesque's Asia Pacific Intelligence our monthly research update on alternative investments in the Asia-Pacific region.