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Alternative Market Briefing

Pure alpha in Asia is tail risk in disguise

Wednesday, May 22, 2013

amb
Peter Douglas
From Komfie Manalo, Opalesque Asia:

After spending 15 years in Asia doing fund management business and analyzing the hedge funds industry in the region, Peter Douglas, head of the Singapore-based hedge fund research firm GFIA pte ltd said that he believes that what in Asia appears to be pure alpha is very often tail risk in disguise.

Douglas was reacting to the question posed to panelists in the latest 2013 Opalesque Singapore Roundtable, where do we find alpha and where do we find yield?" He stated, "We can find alpha, but how much are we prepared to pay for it? It’s fine pulling 5% per annum of alpha out of a strategy, but if your manager is taking 4% of that in various fees, then why bother?"

The 2013 Opalesque Singapore Roundtable was sponsored by Eurex, Taussig Capital and Eurofin Asia Group and took place on April 23rd in Singapore.

According to Douglas, the big risk in Asia is not volatility, politics or market risk, but liquidity. He added that in Asia, it is always provisional so any strategy that relies on high gross and low net is a risky one.

"And that’s often where we find the "alpha" managers playing,"......................

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