Hyundai to back Asia hedge fund led by ex-ABN AMRO exec

HONG KONG/SEOUL, March 6 Wed Mar 6, 2013 12:45am EST

HONG KONG/SEOUL, March 6 (Reuters) - Hyundai Securities Co Ltd is seeding capital to a new Singapore-based hedge fund, making its first such play outside South Korea in a sign that the regional industry may be turning a corner after years of stagnation.

Returns at Asian hedge funds are up 5.25 percent this year, as measured by tracker Eurekahedge's index, outperforming a 2.12 percent gain in global peers and raising hopes of a recovery after net outflows worth about $3 billion in 2012.

A Hyundai Securities spokesman on Wednesday said the firm planned to set up a fund in Singapore under the leadership of Dr Kim Hong-shik, a derivatives specialist who headed the Asian equity-linked products for ABN AMRO and was founding member at K3 Capital Management, a Singapore-based hedge fund.

The South Korean firm gave no further details, but three sources familiar with the plan said the fund, named AQG Capital Management, would start trading with about $100 million in the second half of the year.

AQG Capital has also hired Minsoo Seo, former equities portfolio manager at sovereign wealth fund Korea Investment Corporation, said the sources who declined to be named as they were not authorised to speak on the plan.

ACTIVITY PICKING UP

Most of the money will come from Hyundai, part of a trend that shows institutions and seeders are turning active in Asia once again, the sources said.

"There are some changes at the margin," said Peter Douglas, founder of Singapore-based hedge fund consultancy GFIA.

"There's a little bit of interest coming back into some of the boutiques and especially some of the really experienced market specialists," he added.

Asian hedge funds managed about $127 billion at the end of last year, nearly $50 billion below the peak assets hit in 2007, Eurekahedge data shows. By comparison, the global industry recovered to manage $2.3 trillion, up from $1.9 trillion in 2007, according to data from industry tracker HFR.

Hyundai joins the likes of FRM Capital Advisors (FCA), a unit of Man Group, which returned to Asia in January to back former Highbridge Capital manager Toby Bartlett's fund.

FCA, which had pulled out seed capital from its lone Asia-based bet in Isometric Investment last year, is seeding Bartlett's Arena Capital with $25 million.

Last month, Singapore-based Mosaic Asset Management, founded by former Brevan Howard and Goldman Sachs executive Tristan Edwards, said it had won seed capital from Woori NewAlpha Fund LP, a joint venture between Woori Absolute Partners and French money manager NewAlpha Asset Management.

AQG Capital will follow an equities long/short market-neutral strategy and use quantitative techniques to bet on stocks. Such funds aim at profiting from both rising and falling prices of securities.

Quant fund managers follow a set of mathematical techniques to evaluate risk, pricing and timing in financial markets, unlike those following fundamental and technical analysis that largely depend on subjective calls.

The hedge fund will compete with regional peers such as $1.5 billion Macquarie Asian Alhpa and $56 million MNJ Asia-Pacific Absolute Return fund, which have produced annual returns of just over 10 percent since launch.