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Hedge Fund

Hedge Fund. Member list. Lam, Ho-kei Jan 023011 Ng, Lok-hang Jessica 033125 Chan, Ka-po Kate 033139 Lee, Tak-ming Alvin 033228 Wong, Wing-yin Winnie 034025 Kwan, Cheuk-shing Elvis 035052. History of Hedge Fund. History of Hedge Fund. Hedge  trying to offset possible losses

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Hedge Fund

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  1. Hedge Fund

  2. Member list • Lam, Ho-kei Jan 023011 • Ng, Lok-hang Jessica 033125 • Chan, Ka-po Kate 033139 • Lee, Tak-ming Alvin 033228 • Wong, Wing-yin Winnie 034025 • Kwan, Cheuk-shing Elvis 035052

  3. History of Hedge Fund

  4. History of Hedge Fund • Hedge  trying to offset possible losses • begin in 1949 by Alfred Winslow Jones • his strategy posted on “Fortune”  short selling and leverage • 1952  A.W. Jones & Co  First Hedge Fund  continuous profit • combination of shared risk to ensure goals • father of hedge fund

  5. History of Hedge Fund (con’t) • Fail & success, quiet & hot  over 2 decades • Late 1990s  Great development & grow rapidly • Currently, over 6,000 exist in industry • size at $1 trillion

  6. Hedge Funds in Hong Kong • History of hedge funds  relatively short in Hong Kong • Intended for sale to public  to be authorized by SFC  comply with hedge funds guidelines issued by SFC in 2002

  7. Hedge Funds in Hong Kong (con’t) • First three authorized funds  First quarter of 2003  2 single hedge funds & 1 FHF • Figures from AisaHedge  first half of 2005  new hedge funds about US $3.5 billions established in Asia  1/3 were entered Hong Kong

  8. Retail Hedge Fund in Hong Kong

  9. History

  10. First Retail Hedge Fund • Approved by the Special Administrative Region’s regulator SFC • Offer to public beyond • Professionals fund manager, divisions of banks, insurance companies &certain pension fund • Private Placement  limited number of persons

  11. Changes in Regulations • Allow fund managers to single strategy hedge funds, FoHFs & capital-guaranteed hedge funds to retail investors • Minimum subscriptions • $50,000 for single strategy fund • $10,000 for FoHFs

  12. First Retail Hedge Fund (con’t) • Authorization of first 3 hedge funds on 28/11/2002  2 single strategy hedge funds • JF Asia Absolute Return Fund • JF Greater China Absolute Return Fund one FoHFs • HSBC Global Strategy Hedge Fund

  13. Regulation of Hedge Funds in Hong Kong

  14. Regulation • Authorization regime govern by SFC • Get authorization before selling in the market • Specific requirements on fund managers • Minimum purchase amount

  15. Fund manager • 4 additional requirements • Assets under management (AUM) • Risk management profile • Internal control system • Information disclosure

  16. Fund manager (con’t) • Professional expertise • 5-year general experience • 2-year experience in specific hedge fund strategy

  17. Fund manager (con’t) • Amount of assets under management • At least US$100 million

  18. Fund manager (con’t) • Risk management and internal control system • Consider business nature • Consider business risk • Set up risk management process • Monitor the model

  19. Fund manager (con’t) • Appointments of representatives and agents • agents involved in the daily operation e.g. administrators, custodians, prime brokers • Sufficient know-how in their own areas • Provide adequate information and training to their selling agents

  20. Regulatory Parameters

  21. Regulatory Parameters • If any company has not complies with the various requirements, then: • liable for a fine of up to HK$100,000 • If it incurred for matters (e.g.: prospectus containing an untrue statement ) • Additional penalties (fines of up to HK$500,000 and imprisonment for up to three years)

  22. Regulatory Parameters (con’t) • Prospectus included: • any prospectus, notice, circular, brochure, advertisement, or other document • offering any shares or debentures of a company to the public • calculated to invite offers offering any shares or debentures of a company to the public

  23. Offer to 'The Public' • There is an exemption: • exempt from the requirement to prepare and register a prospectus • It is necessary that: • He offer is either not made to 'the public' ,or; • The offer falls within one of the available statutory exemptions

  24. Offer to 'The Public‘ (con’t) • Two available exemptions: • Professionals only • Private placement

  25. Six types of Hedge Funds in Hong Kong

  26. Six Types of Hedge Fund in Hong Kong • HSBC Global Strategy Hedge-USD • JF Asia Absolute Return-Notional Class • AJF Greater China Absolute Return-0301 • JF Japan Absolute Return-0308 • JF Korea Absolute Return-0309 • Man Hedge Diversified Ltd

  27. HSBC Global Strategy Hedge Fund匯豐環球策略對沖基金 • NAV (2006-03-31) 12.499 • Total Net Assets 17,960 (in thousand)

  28. Fund performance • Annual Returns (%, USD) • Growth of $10,000 • 2004 gain 5.16% • 2005gain 8.73% • Now gain 4.24%

  29. Fund fact • Minimum Purchase(USD ) • Initial Investment • 10,000 • Additional • 1,000

  30. Fund fact(con’t) • Annual Expense • Mgt & Distribution Fee • 1.65% • Sales Fees • Initial • 5.25% • Deferred • ---

  31. JF Asia Absolute Return JF亞洲先鋒基金 • NAV (2006-04-21) • 44.0127 • Total Net Assets(000's) • 85,300

  32. How has this fund performed? • Annual Returns (%, USD) Growth of $10,000 • 2003 27.5% • 2004 -4.13% • 2005 -1.67% • Now 17.93%

  33. Fund fact • Minimum Purchase(USD ) • Initial Investment • 50,000 • Annual Expense • Mgt & Distribution Fee • 1.00% • Sales Fees • Initial • 5.00%

  34. JF Japan Absolute Return JF日本先鋒基金 • NAV (2006-04-21) • 17589.9200 • Total Net Assets(000's) • 44,905,300

  35. How has this fund performed? • Annual Returns (%, USD) Growth of $10,000 • 2004 23.86% • 2005 7.13% • Now -1.62%

  36. Fund Fact • Annual Expense • Mgt & Distribution Fee • 1.00% • Sales Fees • Initial • 5.00% • Deferred • ---

  37. Case Study 1HSBC Global Strategy Hedge Fund • a fund of hedge funds • a diversified portfolio made up of equity long/short hedge funds

  38. What does this fund own? • Cash 3.5% • Stock 0% • Bond 0% • Others 96.5%

  39. HSBC Global Strategy Hedge Fund (Con’t) • Inception Date:2003-02-28 • Manager Name: Team Managed • Fund Advisor: HSBC Republic Investment Limited

  40. Fund performance • Annual Returns (%, USD) • Growth of $10,000 • 2004 gain 5.16% • 2005gain 8.73% • Now gain 4.24%

  41. HSBC Global Strategy Hedge Fund (con’t)

  42. How risky is this fund ? • Worst Quarter Return2.54% • Number of Funds in Category: 5  diversify risks

  43. Case Study 2JF Asia Absolute Return - Notional Class A • Aggressively managed portfolio of equities, bonds and currencies, and derivatives of any of these • Investing primarily in the Asia-Pacific region (including Japan)

  44. JF Asia Absolute Return - Notional Class A(Con’t) • Inception Date:1998-10-30 • Manager Name: Victor Lee • Mgr Start Date: 2005-07-18

  45. How has this fund performed? • Annual Returns (%, USD) Growth of $10,000 • 2003 27.5% • 2004 -4.13% • 2005 -1.67% • Now 17.93%

  46. JF Asia Absolute Return - Notional Class A (Con’t)

  47. How risky is this fund ? • Worst Quarter Return 12.34% • Number of Funds in Category: 5 • Risk Profile(3-year standard Deviation)

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