05/09/2014 - 14:03

Perth-based hedge fund to serve Asian tastes

05/09/2014 - 14:03

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Investment banking group Azure Capital has added to the state’s small funds management sector by offering an Asian-focused hedge fund run by an experienced operator drawn to Perth for family reasons.

Perth-based hedge fund to serve Asian tastes
DISTANT FOCUS: Fund manager Rupert Foster has joined with Azure Capital to start an Asian hedge fund. Photo: Attila Csaszar

Investment banking group Azure Capital has added to the state’s small funds management sector by offering an Asian-focused hedge fund run by an experienced operator drawn to Perth for family reasons.

Azure, which already has a resources fund, has teamed up with former London-based fund manager Rupert Foster to start its Azure Asia Pragmatist Fund, which it quietly launched a few months ago with committed seed capital of around $22 million.

About half of that is already invested.

Mr Foster has 20-year track record of funds management, mostly in hedge funds in Asia. Arriving in Perth about 18 months ago, he joins a rare club of Perth-based funds managers.

A small clique of equity, currency and derivatives-focused funds exist in Perth, most based in the seaside suburb of Cottesloe. In the city, brokers such as Patersons and Euroz have their own funds, focused in the main on Australian equities; and there are also listed investment vehicles such as Katana Capital.

In addition there are private wealth players such as Wyllie Group, which runs a venture capital fund Viburnum, and a major branch of the US-based Resource Capital Funds.

This year, RCF’s local boss, James McClements, became a significant investor in another local operator, Jon Horton’s, hedge funds operation NWQ Capital Management, which has around $100 million in management.

NWQ’s flagship, NWQ Fiduciary Fund, was this week acknowledged the number one ranking for risk-adjusted performance for Asia-Pacific by research house Eurekahedge.

“The opportunity for Perth is that it is now a wealth centre,” Mr Foster said, citing major cities in the US such as Houston and Dallas that have their own indigenous funds management, rather than simply relying on New York.

That wealth is also looking to diversify out of Australian equities and is looking to Asia, a region it understands well.

Nevertheless, Mr Foster said it was early days for his new fund, particularly as it would have both long and short positions. This strategy is something many local investors view with caution, even though Mr Foster believes the Australian preference for long-only equities is much riskier.

In recognition of preference and the need for a track record, the fund is actually being marketed to Mr Foster’s former clients in Europe where hedge funds are better understood. He has established it as a Luxembourg-based Ucits vehicle to accommodate that.

Mr Foster said the goal was to grow the fund beyond $100 million and launch other funds with different approaches, including a potential Asian Optimist Fund, which would be a long-only fund to better suit Australian tastes.

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