Asian equity derivatives market veteran Nick Waltner plans to start using over-the-counter derivatives when his fledgling hedge fund, Kulshan Capital Management, reaches USD50 million in assets under management. The Seattle-based fund, which has USD5 million under management, is building up a track record in the U.S. cash equity market and will look at overseas markets such as Asia in the coming months, he said. Waltner, who established the fund last year (DW, 3/18), was previously responsible for setting up an Asian equity derivatives business for Bank of America in Tokyo and before that ran the equity derivatives desk at Nikko Salomon Smith Barney.
"We're focusing on multi-strategy arbitrage within the equity universe," said Waltner, managing principal. He expects the fund to use OTC instruments such as single-stock and index options, volatility swaps and credit default-swaps.
Kulshan began trading in November and employs three core strategies: merger arbitrage, tactical market timing and volatility arbitrage. The fund will kick-start its marketing effort next month.
Waltner believes the fund will appeal to investors because of its emphasis on transparency and controls. "We want to alleviate common concerns from hedge fund investors: lack of transparency, lack of liquidity, excessive leverage and hubris," he noted. "Funds that address these issues are likely to have an advantage over funds [that] continue to operate with the old hedge fund mentality of 'don't ask, don't tell.'"
Waltner has approached several potential investors, including the fund-of-funds group at BofA.
