Singapore hedge fund Arrowpoint capitalised on May market turmoil
[HONG KONG] Singapore's multi-strategy hedge fund Arrowpoint Investment Partners has made gains by exploiting market dislocations triggered by global trade tariff shocks and sees more arbitrage opportunities ahead, its chief investment officer said.
Since mid-April, the US$1.1 billion fund has capitalised on extreme dislocations in equities, currencies and bond curves, founder and CIO Jonathan Xiong told Reuters.
May was the fund's best month since its launch last July, up more than 3 per cent, said a person familiar with the matter who declined to be identified.
By comparison, multi-strategy hedge funds were on average flat in April, data from With Intelligence shows.
Backed by Blackstone, the Canada Pension Plan Investment Board and Temasek's Seviora, Arrowpoint was Asia's largest hedge fund startup last year. It now has around 110 staff with over 20 trading pods.
'Everything has got more volatile, but there are also opportunities that were so abundantly clear,' said Xiong, a former Asia co-CEO of Millennium Management.
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Arrowpoint exploited dislocations in Asia FX markets using non-deliverable forwards and profited from Australian rate curve anomalies following US President Donald Trump tariff announcements, Xiong said.
It was able to take advantage of temporary mispricing in asset prices, betting they would eventually revert to normal levels.
'One thing I noticed is that Asia dislocations take much longer to come back as the market is less liquid compared to the US,' Xiong said.
Arrowpoint, however, stayed clear of Japan's rate markets, where super-long bond yields were driven to record highs in May.
'The risk premium injected towards the longer end of the Japan curve may be warranted given investors' repricing of global bond term premiums,' he said.
At the Sohn Hong Kong Investment Leaders Conference on May 30, Xiong pitched a long China/short Japan 'risk parity' trade, which involves buying China stock index futures and five-year government bonds, while shorting similar Japanese assets.
He said investor interest in Asia-based multi-strategy funds is rising as there's growing concern about over-exposure to US markets. REUTERS
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