Alexander Ries, Founder and Managing Director, Bamboo Capital
Can you tell us a bit about Bamboo Capital?
Bamboo Capital is a CTA/managed futures type of hedge fund management company. We trade futures and liquid foreign exchange markets. We develop our own models to identify and exploit
patterns and trends in the prices of the instruments we trade.
Describe your investment strategy and why it differs from what other fund managers are doing?
The large majority of fund companies in Asia are discretionary long/short equity funds. Firstly, as mentioned above, our investing universe comprises the most liquid commodity and financial futures, not equities. Secondly, we are not discretionary but use quantitative models in a systematic way. For example, 80% of our models are trend following in nature, so if our investors see the price of gold go from $1,000 to $1,600 they know we will have taken a big chunk out of that move.
What investment themes in Asia do you see as the most attractive at the moment?
Although we trade Asian equity index and commodity futures, we do not have a specifically Asian focus.
How has your approach to risk management changed in recent times?
Our approach has not changed. Just as we use models to identify trading opportunities, our market risk is also managed by systematic models. These models adapt to market conditions and performed as they were designed to do, for example during the recent earthquake in Japan. However since 2008 we are more aware of counterparty risk, although given the universe of instruments we trade, we only have to worry about our broker, cash custodian and exchanges.
Do you see regulation as a threat or an opportunity?
A threat. Unless one is in the business of regulatory arbitrage, compliance with extra regulation is nothing but a direct cost with no benefit, although we agree with the new MAS requirement for an independent fund administrator/custodian/auditor setup to avoid Madoff situations.
Fund raising in Asia: as Asian investors increase their hedge fund allocations, do you think Asian managers will start to benefit more or will global fund managers get most of the assets?
With brand consciousness such an important factor in Asia, this is not an easy environment for a small hedge fund. Global fund managers and large Asian companies will benefit most.
Why have you chosen to operate from Singapore?
A) Because the market was new and the strategy used by Bamboo Capital was under represented here and so we felt there was an opportunity.
B) Because the regulatory and business environment were very conducive.
C) For personal reasons.
What would you have done if you hadn’t been a fund manager?