Prop traders set up Asia macro fund

Two investment bank proprietary desk traders, Ian Emmett and Julian Reis, have set up their own firm, Pagoda Advisors, in Singapore and will soon launch their first fund, the Pagoda Macro Fund. The new fund will have an Asian focus and will invest in relative value strategies, local currency markets and local currency fixed income.

The fund's focus on relative value strategies, on Asia and its managers' technical experience differentiates it from peers, the principals believe. Pagoda believes that its strategies, whilst demonstrating above market returns, will also provide low correlation to global macro strategies.

Emmett says that they are targeting a lunch size of between $25 and $30 million. Both partners are currently on a trip to the US and Europe to visit fund of funds and other potential investors. "We have been approached by US and European fund of funds who believe they are under invested in the local Asian markets and also institutional investors who want diversification from their generic macro funds," says Emmett.

The fund will close at $500 million. Pagoda has a time horizon of two and half to three years for this level to be reached.

Emmett gained his experience with CSFB and HSBC and was CSFB's head of proprietary trading in Singapore from 2000 to 2002. Reis built his macro experience with both Deutsche Bank and CSFB and was most recently on Deutsche's Asian relative value proprietary desk in Singapore.

Reis says that banks in the region have played a significant role in developing the local markets: "It has been very valuable that firms such as Deutsche Bank have developed the derivatives market here. They have helped push the market a long way. Having these firms transfer some of their intellectual property to Asia and apply these derivatives products in local markets has helped create a wide range of products to trade in both the onshore and offshore markets."

The fund is registered in the Cayman Islands and Bank of Bermuda is the fund administrator. Emmett says that they are in the final stages of talks with a prime broker.