Hong Kong Hedge Fund Segantii Returns 29% Set for its Best Year
October 18, 2011, 3:46 AM EDTBy Bei Hu
Oct. 18 (Bloomberg) -- The Segantii Asia-Pacific Equity Multi-strategy Fund returned 29 percent this year through September, heading for its best year even as peers are bracing for another annual loss.
The $292 million fund run by Hong Kong-based Segantii Capital Management Ltd. gained 7.6 percent in July and 5.3 percent in September, rounding up its best ever quarter, according to a newsletter sent to investors. Kurt Ersoy, Segantii’s chief executive officer, declined to comment, citing the private nature of the fund.
European, U.S. debt crises, mixed economic data and Asia’s inflation pushed the MSCI World Index down 17 percent in the three months to September, its worst quarterly performance since the collapse of Lehman Brothers Holdings Inc. three years ago. Yet funds like Segantii, which don’t bet on general market directions, fared better during the months when HFRI Fund- Weighted Composite Index also posted its biggest quarterly decline since the global financial crisis.
“Our blend of relative value and events enabled the fund to profit during the initially benign and subsequently volatile environment,” Segantii said in the newsletter. “We approach year-end well prepared for a challenging and evolving investment landscape.”
Price swings, measured by 30-day volatility of the MSCI Asia-Pacific Index, jumped to an almost 2.5-year-high earlier this month as investor confidence weakened. The HFRI index lost 5 percent in the first nine months and may end the year with its third annual loss in the 22 years that Chicago-based Hedge Fund Research Inc. has tracked the data.
Asian Focus
The Segantii fund trades Asian equities and equity-linked securities with a focus on North Asian markets, according to a marketing document distributed to potential investors in May.
The fund’s relative-value strategy seeks to profit from pricing gaps between different share classes of the same companies, or shares quoted on different exchanges, and those of two similar stocks.
“August and September saw volatility rise for most asset classes, particularly in Asian equities and currencies,” its newsletter said. “Returns were driven primarily by our overnight and China trading strategies.”
It also exploits the pricing effect of corporate events with well-defined catalysts and timelines, the marketing document said.
“After an active July and a quiet August, activity picked up appreciably in September,” the newsletter said without elaboration. “The distressed market conditions towards quarter end presented opportunities that we will look to realize in October.”
The fund started trading in December 2007 and has posted positive returns in every year since. It gained 24 percent in 2008, its best year so far, when the HFRI index retreated 19 percent.
Segantii Chief Investment Officer Simon Sadler was a head of Asian equity trading for HSBC Holdings Plc’s regional securities unit, according to the marketing document.
--Editors: Linus Chua, Malcolm Scott.
To contact the reporter on this story: Bei Hu in Hong Kong at bhu5@bloomberg.net.
To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net
