A New Hedge Fund Posts 15% Gain in Korea Even as Market Slumps

(Bloomberg) -- A hedge fund that started this year is producing double-digit returns in South Korea even as the stock market slumps.

Billionfold Asset Management Inc. has returned about 15 percent since January mainly through a long-short strategy focused on South Korean equities, Chief Executive Officer Hyungjin An said in an interview in Seoul. The Kospi index has fallen 9.2 percent this year. The firm has attracted 440 billion won ($389 million) to its four funds, mostly from retail investors, An said.

Three of Billionfold’s seven fund managers have spent some time as day traders, one for as long as 10 years. While An himself has an established financial career, he also traded for a while after he quit his job as a prime broker in 2013. He joined Timefolio Asset Management, a small hedge-fund firm in Seoul, as a fund manager in 2014. There, he made a total return of 297 percent until he left last year, he said.

The managers at Billionfold trade about 500 Korean stocks, mainly large-cap companies in the benchmark Kospi. They try to maintain an even balance between long and short holdings, while each investor has his own strategy, ranging from quantitative trading to event-driven.

Unwelcome ‘Heretics’

"South Korea’s financial elite doesn’t welcome day traders, regarding them as heretics who didn’t take the traditional steps to becoming a fund manager -- a degree at a top university and experience in research," An said in his office on the 44th floor of the International Finance Center in Seoul. "I don’t agree with that."

The firm’s success in the first half of 2018 was due to buying rechargeable battery companies and multi-layer ceramic capacitor makers such as Samsung Electro-Mechanics Co., whose shares have risen 41 percent this year, according to An. The fund manager declined to comment further on holdings, saying he trades many stocks every day.

When An worked for Hanwha Investment & Securities Co., he was famous for his daily stock trading advice for wealthy retail investors in the Gangnam district of Seoul, according to Yurim Song, an analyst at Hanwha. "He was known for his instinct and talent of equity trading, knowing exactly when to buy or sell a stock," Song said. An was one of the “core managers” at Timefolio, said Nam-su Kim, a private wealth manager at a branch of Samsung Securities Co.

A Eurekahedge Pte index of global long-short hedge funds has returned a mere 1.1 percent this year. A Eurekahedge gauge of Korean equity long-short funds has posted an almost 10 percent loss in 2018.

©2018 Bloomberg L.P.