Best hedge Funds in SEA

by | Mar 23, 2020 | Startups | 0 comments

Before supplying you with a list of the most important hedge funds of the South East Asia region. It is important to know what a hedge fund is, how they operate, and how to find one which suits you. In this article, you will learn all of this. After, a list of hedge funds in Malaysia are supplied to give you easy access to all the different ones.

What is a hedge fund?

A hedge fund is an alternative way of investing. With this type of investing a pool of funds is gathered to create one fund. This Fund then can adapt separate strategies which depend on the preference of the investors. It can be either very aggressive or defensive managed. Aggressive hedge funds are aiming to have a huge return and are riskier then defensive managed hedge funds.

How does a hedge fund operate?

Hedge funds only accept qualified investors so not everyone with capital can join. Usually, this means an individual with a net worth of more than 1,000,000 USD or an income exceeding 200,000 USD for two or more consecutive years.

Another feature of a hedge fund that it is not limited to one type of investing. Hedge fund invests in a wide range of investment opportunities like real estate, the stock market, currencies, and land. This is possible due to that a hedge fund exists of private investments, therefore there are no limitations in what they can invest.

Hedge fund does not use the usual expensive ratios charged to the investor. Usually, the two and twenty fee structure is has used this consist of a 2% management fee and a 20% cut of the gains generated by the hedge fund.   

A hedge fund is actually used to reduce risks as pooled funds can diversify its portfolio easier. Instead of one investor investing in one investment, there are a lot of investors who are all investing together in a lot of different investments.  

The difference between a Hedge Fund and a VC

Hedge funds and VC‘s are similar as they both are funds that manage the money of investors. The differences can be seen when looking at the type of investment they make. VC’s invest usually in growing companies in return for a part of private equity, the amount depending on the valuation of the company.

Hedge funds are also pooled funds managed by investors, the managing party of the hedge fund usually also invest in the hedge fund to ensure that the priorities of the investors and the managing party are aligned. This is in a venture capital firm not always the case. Another difference is that as mentioned before hedge funds have the ability to invest in a lot of different categories from stock to real estate. VC’s only invest in growing companies while hedge funds usually invest in stocks.

How to find a hedge fund that suits you

To find a hedge fund that suits you as an investor you should keep in mind what is important to you, a high return or a steady one? Many investors look at the returns of the past five to ten years. None the less for most investors this is not enough they analyze some KPI of the hedge fund they are interested in.

For start-ups looking to get funded by a hedge fund, this is rather hard to seek out. To get a hedge fund to invest in start-ups is not easy as described before they do not only invest in start-ups, they invest in very diverse investments. The most used method is getting in touch with these hedge funds either online or through a networking session.

How to find a hedge fund

During the research for a list of most important hedge funds in SEA, it became very clear that hedge funds are hard to be found. That is why we have made a list of the most important hedge funds and not all of them in this region.

The top reason why hedge funds are difficult to find is that their goal is not to have a well-known name. Hedge funds are exclusive and most investors get invited to join rather them seeking out a hedge fund to join. Therefore, most do not have a website of any sort or any other social media to gain traction of visitors.

Due to these reasons, only the best performing hedge funds are known, that is why we decided that for this article it would be most useful to only use the best performing hedge funds of SEA.

List of most important hedge fund of SEA

Vanda global fund

This hedge fund is run by Chong Chin Eai, his hedge fund was the best operating hedge fund of 2019. In this year they gained over a whopping 300%.

PruLev Global Macro Fund

These hedge funds are run by Norman Tang Meng Biao and companion August Li Jin Hui. They are well known for their global portfolio which is believed to be one of the driving factors of their success.   

Graticule Asset Management Asia

This hedge fund has been one of the larger ones for quite some while now. They have managed to open up offices in Singapore, New York, San Fransisco and London. This was all due to there incredible track record.

Dymon Asia Capital

This Hedge fund has been founded in 2008, within eight years in 2016 they had managed to get a place in the top 50 hedge fund list created by Bloomberg. Since they have continued on growing.

AR Capital Private Ltd

This hedge fund was founded in Singapore in 2012, by Leong Wah Kheong who has had more than 30 years experience in investing. They’re focused on having between 30-50 stocks in their portfolio to have a steady growth.

Check out our Venture Capital list!

Why Singaporean hedge funds succeed

The first theory suggests that success is due to the large amount of capital some wealthy Asians have. This gives them the ability to invest in risky investment as they can afford to lose the capital. Besides this, there is a lot of capital coming into Singapore, which enables hedge funds to invest way more and in a more diversified portfolio. Lastly, hedge funds in Singapore are run by small teams. Some are even operated by a single person with one desk and one computer. In other words, the cost to run such a hedge fund are minimal.

The second theory that Singaporeans are very internationally focused. Their own stock market used to be very volatile which enabled hedge funds to invest in rather risky but high-rewarding investments. Now that their own stock market has been stabilizing, they are seeking foreign investment to reenact what they have previously down, resulting in huge returns of the hedge funds.

The last theory is that they have been lucky, this is least likely as two of the top ten performing hedge funds are located in Singapore. It could, however, be that hedge funds in Singapore are copying each other resulting in similar margins of return.

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