Tai Tam Capital'sHui-Wen Shiau (see attached photo) and Jun-Tsiang Lam outline the thinking that is driving the investment strategy of their new As

Tai Tam Capital'sHui-Wen Shiau (see attached photo) and Jun-Tsiang Lam outline the thinking that is driving the investment strategy of their new Asian Global Macro Fund.

HW: What is the background to your company?

WS/JT: Tai Tam Capital (TT) is an Asian alternative asset management company founded by its principals, Hui-Wen Shiau and Jun-Tsiang Lam

Shiau and Lam have transacted and worked together for over 10 years.  They have 40 years of combined Asian capital markets experience over multi-asset classes with such firms as Credit Suisse, Deutsche Bank, UBS and Lehman.

TT is looking to launch a USD100m Asian Global Macro Fund by our initial soft close of January 2009.
The fund strategy is to invest in all four asset classes across Asia + G7.

As a precursor to launching the Fund, TT has traded our proprietary capital since Aug 2007 to July, 2008, achieving gross cumulative returns well in excess of 50%+ over 12 months with a Sharpe ratio of 1.53 and -.12 correlation to S&P500

HW: Who is your prime broker?

WS/JT: Our prime broker is Newedge

HW: How and where will you distribute the fund? What is the profile of your current and targeted client base?

WS/JT: We are working with Newedge's capital introduction team and our advisors to identify global investors.  Our targeted returns are 25%+ with a primary focus on capital preservation; hence, we appeal to investors who appreciate absolute returns, not relative and that risk of ruin is different from volatility.

HW: What is the investment process of your fund?

WS/JT: We use a tri-angulation process to identify trades which are most congruent with the outcome of:

• classic macro top-down fundamental analysis, accentuated by our informational edge of being in Asia for a combined 40 years.
• proprietary technical tool: Switchblade - system which invokes trend crossing heuristics by letting averages determine execution
• trading all asset classes improves our data gathering and at same time, the opportunity set for trading.

HW: What is your approach to managing risk?

WS/JT: Dynamic risk allocation which incorporates volatility of the asset.  Position sizing is critical to our success, not just calling the markets "right."  Reduce volatility by trading non-correlated assets.  Maximum leverage is relatively modest at 2x (1:1 debt to equity). The liquidity and transparency of the instruments traded reduce the frictions of trading and permit nimbleness in scaling in and out.  Lastly, the fundamental appreciation that a dollar of profit is different from a dollar of loss.  These are all particularly important criteria  for investors in today's environment.

HW: Has your performance been as per budget and expectations?  Do you expect your performance or style to change going forward?

WS/JT: While we are certainly encouraged by our past 12 month's return of 50%+ compounded annual returns, our proposed fund's target return remains at 25%+ with a traditional 10-15% volatility.  As macro trading is highly scalable, we do not expect our strategy to change as a function of fund size.

HW: What opportunities are you looking at right now?

WS/JT: We may well be entering the final stages of this bear market even as this U shaped recovery in asset valuation may be 6 months or multi-years away.  As the unwind of the past few year's theme of weaker dollar, strong commodities and weak equities have played out over the past summer, we are now approaching a true bear market where all assets sell off.  For example, lower oil has not led to an equity bounce.  Oil turning below 105 would negate the long-term up-trend.
It may soon be long, long bonds.

HW: What events do you expect to see in your sector in the year ahead?

WS/JT: The true worry for systemic risk is not stagflation as Volcker solved it neatly by hiking rates to 18% but a financial wipeout which leads to a Japan like recovery of the past 15 years.  Thankfully, we have a Fed Chairman who cut his teeth academically warning about deflation and the ineffectiveness of ZIRP (zero interest rate policy).
 
HW: How will these changes/future events impact on your own portfolio?

WS/JT: We are not investors who get caught in the value trap as the market sinks.  We shall continue to trade nimbly in these market conditions both on the long and short side, including volatility plays.

HW: What differentiates you from other managers in your sector?

WS/JT: While macro may be the flavor of the day, we would like to differentiate our macro strategy as across all asset classes in asia +g7 which greatly expands our opportunity beyond today.  We target large moves in asset prices with modest leverage and not mean reversion trades with high leverage as other macro funds.

The inefficiencies of the Asian markets create bigger opportunity sets than trading only G7.  We believe that understanding what Asian and Middle East investors are doing with their USD-based economies and investments will provide us a better picture of the world than looking at it through G7 eyes.