True Partner blazes a trail in arbitrage

Publication about CEO Ralph van Put on AsiaHedge.com Vol 12 issue 9 JULY/AUGUST 2012

Article with Ralph van Put, CEO of True Partner Holding Ltd.

Hong Kong-based True Partner Fund, an Asian equity volatility arbitrage fund that has delivered 16.7% returns since its inception a year back, is opening to external investors with the intention of scaling up assets to $200 million.

The fund, which started quietly with $21 million in seed capital and internal money last July (and now at $33 million), is one of the best-performing funds in the Asian volatility space this year, and is attracting significant investor interest due to its market-neutral, absolute return strategy.

The fund primarily buys and sells relatively undervalued and relatively overvalued exchange traded equity and equity index options, using a proprietary volatility trading model and software developed in-house over the years.

It differentiates itself through its market-making approach and through the fact that it is one of the very few volatility funds in Asia that trades globally and all time zones from Hong Kong, using a single trading book for all the markets (US, Europe and Asia).

“As market makers, risk always comes firstfor us. You learn to think in terms of spreads rather than in outright directional bets. While an outright bet may give spectacular returns if you are right, it can be very painful if you are wrong, especially if you trade volatility,” said Ralph van Put, CEO of True Partner. “Although less exciting, volatility spreads have a much better risk-return profile,and our strategy reflects this – global volatility spreads with an overall market-neutral bias.”

Risk management is strict and real-time, added van Put. “Although it may sound like a paradox, we use volatility as an asset class to create stable returns.”

The core team comprises Govert Heijboer, who is CIO and senior portfolio manager; Roy van Bakel, who takes on the role of CTO and risk office; and Judy Chan, who is the firm COO. CEO van Put, seen by many as a pioneer in the global derivatives business, is also an adjunct professor of finance at the Chinese University of Hong Kong.

Asian markets, which tend to be less mature and loosely connected due to difference in currencies and policies, offer excellent opportunities, said Heijboer. “Also, the pool of products available to us is growing in Asia. For example, the Nifty options have just started trading on the Singapore exchange.”

Current capacity is $200 million, but the firm believes that it can manage up to $500+ million by expanding into other asset classes such as fixedincome, commodities and currencies.

–––––––––––––––––––––––––––––––

This cover-article can be downloaded as a pdf and is available at the website of AsiaHedge

Download the pdf
Go to the website of AsiaHedge