Bumper pay day for fund pioneers

Date: Sunday, January 7, 2007
Author: Louise Armistead, Timesonline.co.uk

FUND MANAGERS at Boyer Allan, the London hedge fund that pioneered specialist investing across Asia, have reaped huge pay packets after capitalising on the booming markets in China and India.

The group, founded by Jonathan Boyer and Nick Allan, shared total pay of nearly £40m, with the top manager earning £13.6m, according to accounts for the year to March 2006 recently filed at Companies House.

The bumper pay has been triggered by strong performances in Boyer Allan’s Japan fund, which generated returns of 44% during the period, the Pacific fund which made more than 22%, and the Indian fund, which produced over 10%.

Boyer and Allan were the first in London to start a specialist Asia hedge fund. They now manage more than $1.6 billion (£830m) of assets.

But despite the success reflected in the latest accounts, recent months have been completely different for Boyer Allan — the firm’s celebrated Japan fund was down nearly 20% a few months ago, according to figures from HSBC.

One fund manager said: “Asia hedge funds are not for everyone: you can get rich but you risk your shirt. Since Boyer Allan is the most experienced, you can imagine what’s happening elsewhere.”

The volatile but lucrative Asian markets have attracted growing interest from the industry, with nearly 40 hedge funds devoted to the sector now operating from London.

The Shanghai stock market soared more than 130% during 2006 and Bombay rose nearly 40%. However, the region is also volatile and considered to be risky.

According to Standard & Poor’s, the 20 worst-performing funds of 2006 were almost all Japanese equity funds. Nonetheless, Penta Japan, which invests in equities, rose 97% last year.

According to Asia Hedge, the trade publication, nearly 130 hedge funds specialising in Asia were set up last year. Of these, almost 25% are thought to have collapsed, which is the highest failure rate among hedge-fund strategies.

One expert said: “Asia is the new big story for hedge funds. In recent years, most investors have stuck with long-only funds believing the markets generally to be on the rise.

“Shorting stocks (selling shares you don’t own in the hope of buying them back at a lower price) is still difficult, which has stunted the growth of hedge funds.”

But the markets and the individual stocks are so volatile that there is plenty of opportunity to make money and demand from investors is firm.

“The use of shorting and other financial tools is making the area mouthwatering for those who are really brilliant,” said one expert.