Singapore is the Place for Great Returns

December 16, 2019 James Heinsman Hedge Fund News

Merlion statue in front of One Fullerton. Photo courtesy of Erwin Soo

The world’s best performing hedge fund for 2019, Vanda Global Ltd., gained 300% this year, and is based in the tiny island city state of Singapore. And Vanda is not the only such fund; Singapore has two of the world’s ten best-performing hedge funds, with a third fund partly based here. By way of comparison, the United States has four, and there are none in either Europe or Hong Kong.

Chong Chin Eai started the fund with US$24 million three years ago, and now he has $222 million aum.

As a group, Singapore hedge funds are also doing quite well. Their average returns for 2019 were 9.4%, says Eurekahedge Pte. Well done, compared with 7.6% returns for Asia funds, and 6% for Europe. The North American Hedge Fund Index published by Eurekahedge shows a 7.6% increase for the past year.

How to explain the apparent Singapore edge? As one of the wealthiest nations in the world on a per capita basis, the wealth management sector is larger by comparison than in other locations. This can breed a tendency to take larger risks than maybe other populations are willing to take.

Also, compared to the size of the hedge fund industry in North America, which is valued at a stupendous US$1.6 trillion, Singapore’s hedge fund sector controls a fraction, US$462.7 billion. This allows investors in the smaller funds to take bigger risks than giant funds like pensions and sovereign wealth funds that require lower volatility even at the cost of larger profits.

Investing with Chong can feel more like riding a roller coaster than investing. Vanda’s annualized volatility is an awesome 72%. In its first year, 2017, it returned 260%, and in its second year it fell by 49%. This year, 2019, the fund soared by over 300%.

Now that he manages US$222 million, he is beginning to slow down the ride, aiming for less volatile growth of about 30% per year.

Chong Chin Eai, Vanda Global Ltd,

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