Samuel Choi, CEO, Elmore Capital
Can you tell us a bit about Elmore Capital?
Elmore is an independent investment manager in Hong Kong founded in 2009. Our ambition is to be a regional player, creating a Hong Kong based platform for managers covering the regional and global markets. Chris Ni, senior portfolio manager, currently manages an Asian Multi-Strategy Alpha Fund – Elmore AMSA Fund Limited comprising three independently managed strategies, namely an Asian focused equity strategy (AES), an Asian focused currencystrategy, and a commodity strategy. Elmore is launching the AES as a standalone fund because of the excellent returns that it has produced up to 2011 July, (+12.7% YTD, 20.0% in 2010, and +38.5% since
inception with a standard deviation of only 11.9%). Elmore has managed the AMSA Fund and thus the AES since August 2009. The underlying strategies and models for the AMSA Fund and the AES had originally been created and also managed by Chris within Shin Kong Life, an Asian life insurance company.
Describe your investment strategy and why it differs from what other fund managers are doing.
The fund management team adopts proprietary trading and risk management models to apply economic and behavioral-based quantitative filters and qualitative views to invest on a market neutral basis. The AMSA Fund seeks alpha from the three uncorrelated assets and strategies. In particular, the Asian Equity Strategy generates alpha by adopting bottom-up multi-factor
quantitative stock selection processes, utilising quantitative filters and judgmental factor weightings, in conjunction with risk management processes aiming to limit downside volatility.
What investment themes in Asia do you see as the most attractive at the moment?
Despite the recent high volatility in various Asian markets, we continue to find the market neutral approach very successful in generating consistent returns. We succeed in generating alpha from our Asian Equity Strategy’s proprietary models, particularly Australia and Malaysia.
How has your approach to risk management changed in recent times?
Our risk management approach has stayed more or less the same. We adopt prudent risk approach and focus very much on downside risk protection, with maximum monthly drawdown of less than 3.4% and 2.9% while annualised standard deviation (rolling 12 months) of 7.2% and 11.9% respectively, for the AMSA Fund and the AES since inception. That is achieved by our market neutral approach, investing in highly liquid instruments, and diversification in assets, and across countries, sectors, products, or positions. We monitor limits, e.g. in CVaR, trade positions, or drawdown, on a daily basis.
Do you see changes in regulation as a threat or an opportunity?
As an emerging manager, we see the new regulations as additional cost burdens. The potential marginal benefit to Elmore and its investors seem to be outweighed by the potential cost at this stage.
Fundraising in Asia: as Asian investors increase their hedge fund allocations, do you think Asian managers will start to benefit more or will big global fund managers get most of the assets?
Although the market has recently seen a return of allocations to emerging managers driven by performance, we find branding is a major focus for many investors subsequent to the financial tsunami. Accordingly, in the near future, the increase in allocation by Asian investors will probably
benefit most those managers (Asian or global) with “brands” as individuals or firms.
Why have you chosen to operate from Hong Kong?
Hong Kong provides the optimal balance of location, legal and financial infrastructure, access to investors, and growth opportunities in Asia for Elmore.
What would you have done if you hadn’t been a fund manager?
Not an option for Elmore at the moment.
(Sep 2011)
