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SHK seeks managers to grow hedge fund arm

Written by: Staff

HONG KONG, Apr 18 (Reuters) SHK Fund Management is planning to recruit new money managers as it expands its fledgling in-house Asian hedge fund unit to meet global demand for exposure to the region, its chief executive said on Tuesday.

The Hong Kong-based firm hopes to set up three to five teams of managers over the next three years to meet the growing hunger of international investors for Asian hedge fund products, chief executive Christophe Lee said.

''The trend is going our way. There's just more and more demand for Asian hedge funds,'' Lee told Reuters.

''We're going for quality not quantity. So as we meet good portfolio managers, and if there's interest on both sides, we'll launch more funds.'' SHK Fund Management, a unit of brokerage Sun Hung Kai&Co.

Ltd., has about 0 million of assets under management in its hedge fund division, mostly from wealthy Asian private investors.

But almost all of that is invested in SHK-sponsored funds that place the money with mostly U.S.-based hedge fund managers such as Strategic Value Partners.

SHK began in-house hedge fund management last June with the launch of the SHK Quant Asia Fund, a long/short market-neutral equity fund seeded with million of SHK's money.

Managed by Willy Ballmann and Tan Lien Seng, the fund returned 6.13 percent after fees in the first quarter, SHK said. It charges a 1.5 percent management fee and 20 percent performance fee -- in line with industry practice.

Lee, a former executive director with Goldman Sachs Asia, said SHK hoped to launch a second long/short equity hedge fund this June, with an event-driven rather than quantitative structure.

He said SHK wanted to bring on talented money managers who might otherwise be tempted to set up smaller boutique firms but don't want the administration and other hassles that come with running their own business.

''The regulations specific to Hong Kong, the regulations specific to the industry globally, make it very tough for two guys, even if they have raised some money, to start an operation,'' Lee said.

He said that because business risk was a leading cause of hedge fund failure, institutional investors -- such as pension funds -- were also looking much harder at the operations side of new funds before committing money.

SHK could handle the settlement, risk-management and other administrative functions, leaving money managers to focus on what they did best, he added.

''A trader can come in, sit down, and plug and play, and he has to worry about the markets every day, and pretty much nothing else. And that's quite a compelling proposition,'' Lee said.

He declined to disclose how SHK and its managers divided the fees on its hedge funds.

Lee said raising money to back a talented manager was not difficult, because so many institutional investors globally, such as pensions and funds of hedge funds, were increasing their allocation to Asia.


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