According to investment banking industry sources on November 19, a hedge fund with earnings rate of 118 percent have appeared as there are rally in small and mid-size stock prices for the first time in two years after large-cap stocks.
Trinity Asset Management saw the earnings rate of its Multistragity Fund 1 reach 118.59 percent as of November 16 since the beginning of the year. Its cumulative return rates came to 188.64 percent after the launch in August last year, which were three times higher than principal. The company’s second and third funds released in February this year also posted high earnings rates of 67.13 percent and 73.89 percent, respectively. Trinity Asset Management gained high returns by proactively allocating 50 percent of its investment portfolio in IT shares.
A hedge fund is a private investment fund that pools capital from less than 49 investors who have more than 100 million won (US$91,199) of investment funds and seeks absolute returns regardless of market conditions. The size of domestic hedge funds surpass 12 trillion won (US$10.94 billion).
Hedge funds that recently show a high rate of return have generated more returns by the rally in large-cap stocks in the first half and investing in small and medium stocks and undervalued stocks in the second half of the year. An equity long-short strategy is an investing strategy, used primarily by hedge funds, that involves taking long positions in stocks that are expected to increase in value and short positions in stocks that are expected to decrease in value. However, a considerable number of asset management companies have dramatically reduced or haven’t used the short strategy as the domestic stock market has become bullish this year.