Former Temasek Holdings managing director, Mathew Welch, is reportedly planning to launch a new hedge fund that focuses on small and midcap firms in Asia’s developing markets.
Dubbed as ACA Asia Dorset Fund, the small- and mid-cap long/short fund has already received $45 million in commitments and intends to reach $100 million in assets under management within the first year.
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The fund has been designed to allocate between 70% and 90% of its assets to equities and the remainder to bonds and targets annual returns of between 8% and 12%, reported Bloomberg.
Additionally, the fund will also allocate 30% of the equity investments in large-cap companies.
The fund will be managed by Asia Capital & Advisors Pte, founded in 2011 by Francis Rozario.
The fund, which is now being raised from family offices, friends and high-net-worth individuals, will be available to institutional investors at a later stage.
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By GlobalDataWelch said: "Economic growth in many Asian countries will outpace the rest of the world over the coming years as the population is young, investment from abroad will increase and the way companies are run is rapidly improving. Many small- and medium-sized companies will benefit from those developments disproportionately as they are often still undervalued and under-researched.
"We will need a two-to-three-year track record and $100 million of assets under management to approach institutional investors. Investors are becoming more cautious about China and we are seeing more investments flowing into Southeast Asia," Welch added.
