Korea hedge fund to open China research office

Korea's Truston Asset Management Company is keen to go global by establishing overseas offices for international research, asset management and marketing purposes.

The boutique equities manager runs assets of a little under $3 billion, making it a small player in South Korea's onshore funds business. The country has 69 asset managers running around $95 billion in equities in onshore mutual funds, according to the Korea Financial Investment Association.

In 2007, Truston opened an office in Singapore, a practice followed by many Korean managers looking to run hedge-fund strategies. The typical set-up sees trading and investment management run offshore, while research remains onshore.

Last August, Truston in Singapore launched a Cayman Islands-domiciled long/short equities fund to invest in Korea equities. The fund's AUM have since mushroomed to $55 million, and it counts several global institutional investors as clients.

Truston now plans to expand on this success, with another Singapore-based long/short equity fund in the works. This time, the scope expands to North Asia, not just Korea, so Truston is planning to open a research office in China as well.

"We are keen to set up a strategic partnership with foreign counterparts for global equity market research and fund distribution/marketing," says Hwang Sung-Taek, chief executive, chief investment officer and founder, based in Seoul. "Eventually we want to be recognised as one of the top, reputable Korean equity-focused hedge-fund and traditional Korean equity managers."

Truston has discussed the possibility of selling its strategy globally with global distributors. This is part of a trend, as other Korean firms, such as Mirae Asset Securities and Samsung Securities, seek to beef up their international offerings of alternative investment products.

The company started as IMM Investment Advisor in 1998 and converted to the current asset-management company in June 2008. (Some of Hwang's partners set up a separate joint venture with Macquarie, Macquarie-IMM Asset Management, which was then sold to Goldman Sachs Asset Management. This is not related to Truston.)

Truston's flagship retail fund, Genghis Khan, outperformed the Kospi equity index by 26% in 2009. Its total return between January 2004 and the end of 2009, based on the Gips methodology, was 256%, beating the Kospi by almost 149%.

That performance has helped the firm retain assets. Year-to-date to April 9, Korean equity funds suffered net outflows of $3.8 billion, but Truston has enjoyed net inflows of about $300 million.

Hwang says the Korean asset-management industry is likely to grow significantly, given that the proportion of household financial assets vis à vis total household assets in Korea is below that of other developed nations (only 26% versus 60%).