New China Multi-Strategy Hedge Fund Launched

by Phillip Morton, Investors Offshore.com

07 February 2005

Qinhan Capital Management has launched a pioneering new multi-strategy hedge fund which will exploit local market knowledge to invest across the full range of Chinese securities, the FinanceAsia news service has reported.

Domiciled in Delaware and headquartered in New Jersey, the Qinhan China funds seek absolute returns through long-short strategies in convertible bonds, equities, fixed income, closed-end funds and overseas-listed securities of Chinese companies.

Recently, the firm opened its Shanghai branch office and will look to use this presence in China as a key selling point to investors.

"Since 2001, the partners have built localized trading and risk management processes, proprietary securities valuation models and unique due diligence practices,” explained John Li Huaizhong, CIO of Quinhan and former money manager at Deutsche Morgan Grenfell and China Southern Fund Management, where he helped to develop China's first bond funds and principal-protected mutual funds.

The report noted that the firm will use an in-house statistics methodology designed to fit the Chinese market, and has formulated simple risk management strategies, such investing only in long-only securities that trade below a theoretical price.

The firm is now in the final stages of selecting a prime broker before launching formally in late March.

The fund has a one-year lock-in period, and charges a 1.5% management fee and a 20% performance fee beyond an undisclosed high watermark.

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