April 26, 2024

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[THE INVESTOR] Han Byoung-ki, CEO of Trinity Asset Management, believes now is the time for fund managers to make bolder choices.

“In a protracted environment of low interest rates, the South Korean equity market is witnessing a plateau-like stage,” Han said in an interview with The Korea Herald. 

“As many would notice, there are few appealing vehicles to make investments.”

“We are targeting those who have the funds to make better investments and seek higher yields as a new era for hedge funds has been introduced to Korea,” he added.

Han Byoung-ki

 
As the global financial market is expected to have low interest rates for a longer-than-expected period, investors’ appetite for higher yields will continue to grow, he says.

Trinity grabbed market attention when it appointed Han, a former fund manager at Meritz Fire & Marine Insurance, as the new CEO in March. 

The asset manager is running 1.03 trillion won in 11 funds under management as of Oct. 4.

As soon as Han joined the firm, he began making changes. In August he launched the firm’s first hedge fund by attracting 18.7 billion won to be under management. Although Trinity was founded in 2008, it was the company’s first attempt at launching a hedge fund.

The fund, called “Trinity Multi-strategy Private Equity Fund Type-A,” hit the market with a yields rate of 8.26 percent as of September. It was the second highest in yields rate among as many as 160 similar hedge funds in the market.

“Our first hedge fund will focus on a few IT equities at home and abroad,” the CEO said. “We are investing in semiconductor and OLED manufacturers and we have trust in their profitability.”

Some portions of the fund are invested in promising Chinese and Vietnamese equities, he said. 

As of late October, the fund showed 5.34 percent in yields, due to recent market volatility. 

“The upcoming US election and a possible rate hike are viewed as unfavorable at the moment, since funds are highly expected to move out of emerging economies,” he said. “We are also cautious about the possibility of tapering in the Eurozone.”  

Against this backdrop, Han is planning to launch his second hedge fund at the end of this year, which will target local equities with a traditional long-short strategy. 

“The long-short strategy is the well-known strategy to seek mid-risks and mid-returns,” he said. “With the second hedge fund, we aim to achieve yields at a stable level while reducing volatility from the Kospi.”

After the Financial Services Commission lowered entry barriers for hedge funds last October by slashing the minimum capital requirement from 6 billion won to 2 billion won, a growing number of asset managers are jumping onto hedge funds in pursuit of high yields.

As of early October, a total of 6.23 trillion won was managed in hedge funds in the Korean market. The number of hedge fund managers increased rapidly from 17 last year to 49. Major securities brokerages such as Samsung Securities and NH Investment & Securities have begun to operate hedge funds on their own.

“Hedge funds were considered a ‘club business’ exclusive to top-level investors, but as the regulator started to loosen some rules for entering the league, we can expect the league to be widened to include some aggressive retail investors, too,” he said. “If the market gets bigger, we can also expect some more creative strategies to hunt higher yields.”   

By Song Su-hyun (song@heraldcorp.com)