Salt wraps up with risk control on funds and delegates

"You are all true warriors," Anthony Scaramucci, managing partner at fund of hedge fund SkyBridge, told bleary-eyed delegates who made it to the opening panel discussion on the final day of the Salt Singapore conference last Friday. Many had spent the previous night drinking at Pangea, an exclusive Singapore nightclub.

During the half-day programme, one panel addressed portfolio risks, with participants discussing changes in operational requirements to support hedge funds. 

"Pre-crisis, there was almost a singular focus…on investment risk," notes Peter Carey, managing director of SkyBridge Capital. Investors were then focused on getting outperformance and uncorrelated returns from their managers.

However, the events of 2008 exposed other types of risk. "There's liquidity risk. Are you going to be able to get your money back when you want your money back? There's operational risk. The firm might be good at trading and making money, but can they do the things that go along with running a business?" says Carey. 

Chris Kundro, co-head of Wells Fargo Fund Services, notes that heightened risk controls have resulted in a more sophisticated operational due diligence process. He adds that some risk areas might still not be covered. "It's not about the questions they are asking, it's about the questions that they aren't asking, in particular, in outlying regions."

As an example, he cites the growing number of credit funds in Asia, which will inevitably capture investor allocations. "Making that transition from equity [funds] to credit is very difficult for many investors out there," says Kundro.

"They're still utilising some of the basic policies and procedures and due diligence processes that they've utilised in equity funds. So it's really going to require an upgrading of talent here in Asia." 

Salt Singapore wrapped up with a noontime talk by the Singapore-based, Asia-bullish bow-tied investor Jim Rogers. 

With just over 1,000 delegates registered, the inaugural conference had about half the registered attendees of Salt Las Vegas in May, which has been running annually since 2009. But Scaramucci envisages that the Singapore event will ultimately overshadow its Las Vegas counterpart.

"There’s about 300 million people in the US and three billion in [Asia]. So there’s no reason why this can’t be five or 10 times more successful," says Scaramucci. 

There is one element between the two Salts in which Las Vegas will retain its title crown. As one hedge fund manager puts it: “Las Vegas is debauchery.”

At a pre-conference cocktail event held at the observation deck of the Marina Bay Sands last Tuesday, the Asia-based manager, speaking above the din of a string ensemble elegantly playing the Beatles’ She Loves You, predicted: “This is about as raunchy as it'll get.”

Having attended the Salt Las Vegas event earlier this year, he notes by comparison that its after-hours activities are akin to The Hangover movie, minus a tiger and Mike Tyson. 

"We’re very sensitive to the cultural differences between North America and Las Vegas, and Asia and Singapore," Scaramucci tells AsianInvestor. "It’s good-natured fun, it’s G-rated fun and we’re not looking to do anything too outrageous."

While Salt Singapore will remain as its US counterpart's more cleaned-up and corporate cousin, a hint of the Las Vegas proceedings could be seen in the post-conference drinks event at Pangea. 

Matching the high-roller reputation that is more associated with US hedge fund managers, Pangea boasts Asia’s most expensive drink: a S$32,000 cocktail that contains edible gold flecks and a one-karat diamond. Salt delegates were given the VIP treatment, with ultra-tall, leather-clad Eastern European waitresses mixing drinks to order. 

What started out as a pleasant meet-and-greet over drinks gradually became more raucous as the night wore on, with escalating music levels and a bit of dirty dancing. 

But the delegates mostly behaved themselves. One could almost hear a collective sigh of relief from the offices of the Monetary Authority of Singapore, which had thrown its support behind the event.

For those who missed out, Salt Singapore will be back next year. While it will be more tame than Salt Las Vegas, you won't have to wake up to find a tiger in your bathroom.