APS Asset Management, an asset manager in Singapore with USD500 million under management, launched its first hedge fund earlier this month. The fund will use over-the-counter equity puts and swaps. "It's a real long/short fund. We're not going to make big directional bets," said Wong Kok Hoi, cio and founder of the firm. The fund, dubbed APS Asia Pacific Hedge Fund, with USD10 million under management, will primarily focus on the cash equity market in Asia, especially Japan, Hong Kong, Singapore and Australia, but will buy puts for Korea and Taiwan. "We'll create synthetic short positions," said Wong, noting that regulations in Korea and Taiwan restrict offshore players from borrowing stocks, therefore hindering short cash equity plays. "We'll start small," noted Wong, adding that it will invest in up to USD2-3 million in OTC products.
Wong will look to raise USD20 million for the hedge fund by year-end. The fund's prime broker is Goldman Sachs Global Securities Services. "We've unequivocally chosen to back these guys," enthused Sam Stubbs, executive director at Goldman in Hong Kong, noting that APS has a strong track record in long only fund management and a good chance of success. He said APS is likely to be active in total-return swaps as well.