Ye Starts Fund After Leading Pinpoint Fund’s 71% Gain (Update1)
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By Bei Hu
May 14 (Bloomberg) — Fion Ye, who led the Pinpoint Rising China Fund to a 70.9 percent gain last year, has started a new asset management company aiming to profit from the country’s growing sway over global commodity markets.
Ye and former Pinpoint Investor Advisor Ltd. Chief Executive Officer Alex Li are setting up the Hong Kong head office for Everest Investment Advisors Ltd. Their first fund began investment on May 4 with initial capital of about $45 million, 60 percent of which came from outside investors, Li said in an interview yesterday.
The Everest Commodity Fund will mainly trade futures contracts listed on global exchanges and shares of leading producers of commodities, betting they stand to benefit as China builds more houses and roads, and uses more cars. Ye will use a similar strategy to the one she employed at Rising China Fund.
“China is having a greater and greater say in the international commodity market,” said Li. “Our edge has really been deeper understanding of how China’s economic development has been affecting global market pricing.”
The fund is marketing itself as a China-focused global commodity fund, with as much as 80 percent of its investments expected to be “closely tied” to Chinese demand for base metals, energy and agricultural products among others, he added. It may also invest in sovereign bonds of countries enjoying a commodity boom.
China, the world’s third-largest economy, has improved its bargaining power in price-setting for raw materials like iron ore and soybeans as its growth spurs demand for commodities.
Everest will have the ability to manage as much as $600 million of assets based on its investment and research team of more than 10 people, said Li. Instead of wagering on a few commodities, it invests in a basket of them, he added.
The fund will pick investments based on fundamental analyses of supply and demand, instead of focusing on short-term price trends predicted by technical analyses, said Li, who left Pinpoint in February.
Ye was portfolio manager of the Pinpoint Rising China Fund from its inception in July 2007 to her departure at the end of January.
Because of global economic uncertainty, Everest is presently focusing more on relative-value trades instead of betting on market direction, Li said. Relative value trades seek to exploit the temporary divergence of related securities from their historical price relationships without wagering on overall market directions.
The Reuters/Jefferies CRB Index of 19 commodities ranging from orange juice to natural gas and copper has lost 49 percent since its one-year peak on July 2. The index dropped 36 percent last year, the biggest decline since at least 1957, as the financial crisis slowed economic growth and cut commodity demand.
Eurekahedge’s index of 371 global commodity trading advisers, also known as CTAs, and managed futures funds lost 2.2 percent this year, after a 17 percent gain in 2008. The Eurekahedge Hedge Fund Index of more than 2000 funds tracked globally slid 12 percent last year, the most since the Singapore-based firm began tracking data in 2000.
CTAs and managed futures funds trade commodity and financial futures contracts, often using computer models.
The Everest fund charges a 20 percent performance fee on profits and a management fee equivalent to 2.5 percent of the assets it oversees, Li said.
Investors can pay a redemption fee to withdraw money during the first year and on a monthly basis after the first year, instead of opting for quarterly withdrawals, he said.
To contact the reporter on this story: Bei Hu in Hong Kong at email@example.com.
Last Updated: May 13, 2009 22:44 EDT