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Derivatives

Asset Manager Launches Debut Fund

Rhicon Currency Management, a fund manager with operations in Singapore, Geneva and Toronto, launched its first fund two weeks ago and it will trade over-the-counter foreign exchange options. Peter Jacobson, managing director in Toronto, said the fund's capacity is USD300 million. It is aiming to reach USD50 million within the first six months and USD100-150 million after its first-year results. "We'll use OTC currency derivatives for managing profits," said Christopher Brandon, managing director in Singapore. The firm will use the derivatives for both hedging and taking profits. For example, it may purchase currency in the spot market and when the pair has reached a target price it will sell the currency and purchase short-dated options to capitalize on further gains, while it has locked in some of the profits. However, Brandon continued that the firm will primarily invest in the Group of Seven currencies, mostly in the spot market and will occasionally trade short-dated options.

The Rhicon Global Forex Fund (Bahamas) was launched with USD1.5 million, said Brandon. "We are confident that we can provide a return of 20-40% per annum- and that's not overly optimistic," noted Brandon, adding that the trading team has made an average of 80% per annum on a proprietary basis. He continued that although most global macro funds that brought currency trading into the spotlight have moved to the sidelines, there is now a renewed interest from investors in the foreign exchange mart. "People are looking for uncorrelated investments," said Brandon, adding that with the dismal performance of the equity market this year, investors are searching for diversification.

 

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