Hedge Funds: Why Some Singapore Hedge Funds are Hitting It Out Of The Park
Some of 2019’s best performing hedge funds are based out of Singapore.
Chong Chin Eai’s Vanda Global Fund is up over 300% this year. He started his hedge fund in Singapore with $24 million from friends and family but now runs $222 million. Annualized returns are 39%, though volatility is a stomach-churning 72%.
What’s interesting is that you couldn’t get a leaner hedge fund than Vanda. Chong is minimalist – he trades the fund with a laptop from his plain desk in a home office. His only luxuries are a Bloomberg terminal and an extra monitor. His trading model runs off an Excel spreadsheet.
“I only have two eyes, right, so how many screens can I look at?” he asked of his Bloomberg interviewer.
Another Singapore hedge fund, Norman Tang’s PruLev Global Macro Fund, is also on the global list of top 10 hedge funds. It more than doubled this year and hit an AUM of $300 million. Like Chong, Tang, too, was a lone warrior until he hired an engineer to assist in building trading models.
Altogether, there are three Singapore hedge funds present in the list of top 10 best-performing global hedge funds.
What makes Singapore funds tick?
One theory is that their patrons have a much greater affinity for risk than global counterparts. Asians are big risk-takers and unfazed by volatility. As a result, a lot of money is coming into these hedge funds. But the funds are still small, therefore nimble, and unshackled by volatility restrictions.
Another is the DNA of the fund managers running these funds. Singapore’s education system gave them a natural ability to tackle quantitative techniques and tools. These managers were forced to look for trading opportunities around the globe due to the relative illiquidity of the Singapore stock exchange. Singapore brokers offer plenty of futures trading opportunities at major global exchanges.
The third theory is that the three Singapore funds, all global macro hedge funds, struck out lucky by latching on early to the bullish US stock markets. Note that the S&P 500 has gained 26% year to date, and the use of leverage could have magnified those gains.
[Related Story: Preqin Report: Five Straight Quarters of Hedge Fund Outflows ]
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