Monday, December 22, 2014

9 September 2013

The Baekdu 1st Hedge Fund, released on September 17 last year by Brain Asset Management, recorded a rate of return of 25.7% as of the end of August. The earnings rate reached 12.3% during the eight months of 2013 alone. Brain Asset Management is currently enjoying the highest share in the local hedge fund market. In the mean time, the combined amount of the hedge funds issued by Korean firms has topped 1.5 trillion won (US$1.4 billion) recently in two years and nine months. 

Since the establishment, the fund has outperformed the Korea Composite Stock Price Index (KOSPI) by 29.5%, whereas the other hedge funds’ rates of return have not exceeded 20%. For example, Samsung Asset Management’s Samsung H Club Equity Hedge and Samsung H Club Multi Strategy have recorded 16.72% and 15.04%, respectively. Shinhan BNP Paribas’ Hankuk Myeongjang Korea Securities Long Short has posted a rate of profit of 5.63% below zero since the establishment, and 2.53% since the beginning of this year. The rates were 6.97% and 12.99% each for its Asia Long Short Fund. 

* Rates of return between date of establishment and the end of August 2013. Source: Each company.* Rates of return between date of establishment and the end of August 2013. Source: Each company.

Brain Asset Management, which had excelled in the sale of wrap accounts, turned itself into an asset management firm in September last year and has taken up 33% of the local hedge fund market since then, managing approximately 500 billion won (US$458 million) in assets. Its hedge fund amount increased from 210.5 billion won (US$192.6 million) to 527.4 billion won (US$482.6 million) between late last year and late August 2013. 

In March, it released its second hedge fund by the name of Taebaek, which is characterized by a sector-by-sector long-short strategy utilizing macro indices, unlike the Baekdu that focuses on companies’ profit growth potentials. “Our strategy of looking into corporate profits and deciding where to invest based on the growth potentials hit the mark,” said Brain Asset Management, adding, “With our total amount of trust recording four trillion won, we’re planning to release our first public offering fund in April next year.”

On the contrary, KB Asset Management and Korea Investment Trust Management, both of which withdrew from the hedge fund market this year due to the lower-than-expected performance, are monitoring the situations before coming back to the market. 

These days, the global hedge fund market is showing signs of recovery and Korean hedge funds are expected to distinguish themselves this year in terms of the profit rate and size alike. “The global total hedge fund assets under management reached US$2.1 trillion as of the end of last year with a rate of return of 6.1%,” said Shinhan Investment Corporation researcher Sohn Mi-ji, adding, “Korean hedge funds are expected to grow to at least three trillion won before 2016.”

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