Merican & Partners Asset Management, with first quarter assets under management totaling USD30 million, is preparing to launch its first hedge fund in the coming weeks and will use over-the-counter derivatives. The fund, dubbed the Iris Asia Fund, will target markets between Pakistan and New Zealand, said Omar Merican, ceo in Kuala Lumpur. He noted that the multi-strategy fund will incorporate strategies such as net-long volatility including convertible bond arbitrage via asset swaps, long/short plays and risk arbitrage.
"I expect leverage between two to four times," added Merican. The target size of the fund is USD25 million with expected returns of 10-15% per annum. "We'll be hedged and diversified," he continued. To hedge large currency exposures, the fund will employ foreign exchange swaps. Additionally, the fund will look to invest in structured notes, such as equity-linked products. Merican said the firm speaks with a number of counterparties for derivatives trades, declining to cite specific firms. The fund's prime broker is Deutsche Bank. Prakash Krishnan, spokesman at Deutsche Bank in Singapore, did not return calls.
