Top Hedge Fund Manager Sets Up S'pore Office

Source : The Business Times, January 25, 2008

Outlook for Asia still bright despite US woes: research head

The US is in recession and equity markets are in bear territory, said Thomas Della Casa, head of research at Man Investments, one of the world's largest hedge fund managers, yesterday.

'We're in a tough market. Equity markets are trying to find a bottom and eventually won't. People might lose more money than they thought. It's a good opportunity for us,' he said.

Rising volatility and the prospect of muted or negative returns are likely to put hedge funds back on investors' radar screens. This is because a number of hedge fund strategies strive for low volatility and stable returns, which tend to underperform in bull markets.

'In 2008, we expect that equity investors will have a tough time; bond investors will also have a tough time. Getting a return of 10 per cent or close to it is not a bad proposition,' he said. The Hedge Fund Research Index of hedge funds' performance showed a 10 per cent return over the 12 months to end-December, compared to 3.73 per cent for the MSCI World Index.

Man Investments, the asset management arm of London-listed Man Group, has set up a Singapore office in a clear nod to Singapore's growing role as an asset gathering base.

Man Investments has about US$70 billion in assets under management, of which 15 per cent or US$10.5 billion is sourced from Asia. Singapore is the booking centre for 80 per cent of the funds sourced from the South-east Asian region. Previously, business sourced out of Singapore had been serviced from the Hong Kong office.

Tim Rainsford, Man Investments managing director for Asia Pacific, said the Singapore office was a direct response to the growing demand for alternative investments. 'Singapore is by no means a new market for us. We have been working closely with clients in Singapore for more than 10 years. However the growth of our business as well as the growth of the hedge fund sector (here) and in South-east Asia means that the time is right to set up shop here so we might serve our clients better.'

In a press briefing yesterday, Mr Della Casa also spoke about the market outlook. 'The US is in recession. The question is not hard landing or soft landing. The question is how long it will last and how they will get out of it.'

Historically, trouble in the US housing market often leads to a prolonged recession, he said. The US savings and loan crisis in the 1980s resulted in a nine-year recession.

Asia would lead global growth, thanks to ongoing infrastructure investments, he added. 'The outlook for Asia is still very, very bright. China and India will hold up the global economy.' Among hedge fund strategies, he expects an 'improved opportunity set' for fixed income, credit and convertible bond arbitrage given the increased volatility, varying opinions and yield curve moves. He sees opportunities in distressed securities as well, and is neutral on the outlook for equity-hedged strategies.