Ex-Gandhara Capital exec to launch macro hedge fund
Aileen Chang is launching a new Asia-themed macro hedge fund named Kriya Uprofish Macro Fund. It is managed by Uprofish Capital Management, a company newly formed by her, on Kriya Capital’s platform.
The fund practices a fundamental-based, top-down strategy with geographic focus on the Greater China region, Korea and Japan. Exposures are mostly to equities, bonds, commodities, and exchange rates.
Chang had worked as an analyst with Davide Erro (the latter is now at Turiya Capital) from January 2004 to December 2007 at Deutsche Bank’s Global Value Group and then at Gandhara Capital, which managed assets of about $3.5 billion at the time she left to manage her own money. Previously she had worked as a consultant at Bain & Company in Seoul and Boston.
“The fund runs a concentrated portfolio based on deep understanding of system flaws, anti-flaws and feed-back loop,” says Chang. “The risk management is focused on down-side, rather than volatility, through stop-loss and draw-down practices. Its investments typically have three to six quarters of time horizon.”
Launch investors are charged full fees for the first three years (management fee 1.5% and performance fee 20%), but are waived of both management and performance fees after 36 months.
They – meaning launch investors only – also receive a guarantee of capacity under the same terms, lest they wish to invest more, up to a sum twice the size of their original investment and that concession extends for five years.
“Given the small size of the fund, I needed a way not to over-burden the fund with overheads in a transparent and consistent way,” she says. “So therefore we have put a ceiling on the amount of expenses the fund will bear. It bears all trading costs (such as broker commission, interest on leverage), but non-trading expenses, such as administration and audit costs, etcetera are capped at 30 basis points of net asset value.”
The initial size of the fund is $6 million, and while it is a long-distance target she estimates that a fund with this strategy and liquidity possesses a potential capacity of $2 billion.
“The constraint for growth is more personnel,” she says. “The plan is that for every $15 million of assets, the fund will hire one more member of staff until there is a team of eight to 10, including a back-office team.”
The fund targets an annual net return of 13% over an economic business cycle. The fund does not target a specific volatility number.
Both subscription and redemption are quarterly. There is no lock-up, but investors are subject to a redemption fee, which is 3% if redeemed in the first 12 months.
Service providers are Goldman Sachs as prime broker, Apex Fund Services as administrator and Appleby as legal counsel.