Swiss Cap aims for tenfold expansion in Asia

Jan 19, 2006

The group''s alternative investment arm is expanding its fund of hedge funds business in Hong Kong.

Swiss Capital Alternative Investments (SCAI), the Hong Kong-based subsidiary of Swiss Capital Group, has disclosed ambitions to increase the size of its Asian Strategies Fund from $20 million to $200 million.

SCAI opened its Hong Kong office in April 2004 and launched its Asian fund of funds in August 2004. It is a multi-strategy fund, 55% long/short equity with the remainder arbitrage, distressed debt and credit derivatives. About 30% of the fund is invested in Japan. This fund of funds invests in 17 managers, 11 of which SCAI has had a previous track record of investment over several years.

The Asian fund has a target return of 12-15%, positioning it higher up the risk curve than SCAI's non-Asian funds, which generate consistent absolute returns of 5-15% with low volatility of 2-8%.

Helen Lo, SCAI's managing director based in Hong Kong, says: "Although last year the hedge fund industry hit some rocks, it's deemed natural for an industry under transition; as hedge funds have moved from being a pure alpha searching cottage industry to a systematic product for institutional clients' core portfolio. Our house has always taken the latter stand. Our emphasis on risk management and portfolio construction enables us to produce consistent returns across all strategies. With the growing institutional market in Asia and our experience and long term commitment to servicing this client segment, we believe the opportunities will be plenty."

Lo has worked with Swiss Capital since 2001. From 1997 to 1999 she worked in the global management office of UBS in Zurich and from 1999 to 2001 with an internet start-up.

Swiss Capital was established in 1998 by a team of ex-UBS bankers with risk and asset management backgrounds. The firm's global headquarters is located in Zurich where a team of 30 researchers are based. The Hong Kong office is staffed by a team of three, and SCAI plans to hire more salesmen in the Territory during 2006.

SCAI now has $1.5 billion assets under management. Its activities are regulated by the Swiss Federal Banking Commission and all of its funds of funds are regulated as 'foreign funds with special risks'. This is a clearly defined and regulated legal concept for Swiss distributed investments.