Goldman Sachs portfolio managers start hedge fund

Two Asia investment experts from Goldman Sachs are launching a new long/short strategy, named the Libra Greater China Fund. The launch is planned for the beginning of June.

Xiong Xiong, GoldmanÆs China country portfolio manager and consumer sector analyst, has teamed up with his ex-colleague, Vincent Ee, the Taiwan country portfolio manager and telecommunications analyst.

As the fundÆs name suggests, the fund strategy is Greater China, with a focus on the mainland, which will be obtained via H shares, red chips and A shares, in addition to Singapore and Nasdaq-listed Chinese shares. Taiwan will also be a component of the asset allocation, up to 20% of assets, together with Hong Kong shares on a selective basis.

Libra Capital Management, whose founders met AsianInvestor at last weekÆs Morgan Stanley hedge fund conference in Shanghai, starts with a team of eight and envisages hiring another three to four people in the next 12 months. Currently Libra has an office in Singapore, with a research office also in Shanghai. They are in the course of applying to Hong Kong regulators to open up a future office there.

The fund managers are inclined towards large and mid caps and have a guideline of being able to liquidate positions in five trading days, assuming their exposure accounts for one third of prevalent trading volumes.

Volatility of the fund is estimated at low to mid teens. The managers declined to disclose target returns for investors. There are no lock-ups, and fees are 2% and 20%.

They target 30-40 long positions along with 10-15 shorts. Average exposure will be 90-130% long and 50-70% short. Under normal circumstances, net exposure will be 50-60%, although under the rarified conditions today they envisage it might be closer to 30-40%.

Service providers are Morgan Stanley and Goldman Sachs as co-prime brokers, Fortis as fund administrator, Clifford Chance as lawyers and Price Waterhouse as tax advisers and accountants.