Local hedge fund delivers attractive returns in first month of launch

This article first appeared in Wealth, The Edge Malaysia Weekly, on November 29, 2021 - December 05, 2021.

"As at Nov 11, CASAF had assets under management of about US$5 million.” - Lee (Photo by Kenny Yap/The Edge)

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Cross-Asset Strategic Alpha Fund (CASAF), the first local wholesale hedge fund with a long-short investment strategy, delivered an attractive return of 8.17% for the first month after its launch on Sept 30.

The fund,  which invests in multi-asset classes, is managed by Cross Light Capital Sdn Bhd, a boutique asset management firm located in Menara Ilham in Kuala Lumpur. The firm was licensed by the Securities Commission Malaysia in November last year to provide private mandate services to sophisticated investors.

As at Oct 31, the fund’s highest exposure was to the absolute return strategy — or the long-short investment strategy, which aims to profit from the ups and downs of markets — followed by private equity replication and precious metals.

“In October, our absolute return strategy delivered positive gross returns of 1.96%. Our cross-asset, long-short strategies with exposure to equity volatility gained 2.21% gross returns for the month while digital asset exposure added 1.1% gross returns,” says Jason Lee, co-founder of Cross Light Capital. Prior to setting up the firm, he was a hedge fund manager for more than 15 years in the UK.

Lee adds that the fund’s long exposure to longer-duration US fixed income and global equities added another 1.02% and 0.85% in gross returns to the fund.

CASAF is distributed by Bill Morrisons Wealth Management Sdn Bhd, a financial planning and wealth management firm. “The fund is unique given its high target returns of 30% per annum with a relatively low correlation to equities. Many of our clients will benefit from these types of funds, especially those looking to diversify their investment portfolios from conventional long-only equity funds,” says Bill Morrisons managing director Billy Hii.

As at Nov 11, CASAF had assets under management of about US$5 million (RM21 million), says Lee.

The fund has a minimum investment amount of US$100,000 and a minimum additional investment amount of US$10,000. It has a sales charge of 5%, an annual management fee of 2% and a 20% high water mark performance fee.

CASAF’s investors are also subject to a withdrawal fee of 3% if they draw out their money in the first year. The withdrawal fee is reduced by 1% in each of the following years, and exempted from the third year onwards.

According to its product highlights sheet, the fund is classified as a mixed-asset growth fund suitable for sophisticated investors with an extremely high risk tolerance and a medium- to long-term investment horizon.