Baring Asset Management has established a fund of hedge funds
that focuses on the Asia Pacific region.
The Baring Asia hedge select fund builds aims to provide returns of 7
per cent above three-month US treasury bills. It will invest in a
portfolio of between 10 and 20 hedge funds, covering a range of risk
profiles and Asia Pacific regions, including Australia and India.
The fund has a bias towards long and short equity because this is
the strategy currently used by most Asian hedge funds, but there will
be some exposure to arbitrage strategies.
Tom Maier, head of Baring Asset Management's investment team,
will manage the fund. Fauchier Partners, a company specialising in
the construction of hedge fund portfolios, will support Maier in terms
of manager selection and strategy allocation.
Fauchier Partners will monitor 200 Asian hedge funds for possible
inclusion in the portfolio. Factors such as performance, whether the
fund managers invest their own money in the funds they manage and
how close they have stuck to their original investment style and
objectives are considered important. Maier and his investment team
will then look at the hedge funds suggested by Fauchier Partners
from a macro-economic position and make their final selection.
Positive economic changes in regions such as China have helped to
drive investment opportunities in the Asia Pacific region, but the
SARS virus has created problems in the short term. However,
conventional funds which cannot sell short are likely to feel the
impact of SARS more than a hedge fund that diversifies across areas
that are unaffected by the virus.
This fund is unlikely to have wide retail appeal but it may be attractive
to institutional investors as a small part of their overall portfolio.