Other Saba Hedge Fund Manager Posts Huge Returns

Apr 6 2011 | 12:17pm ET

Boaz Weinstein may be the best-known veteran of Deutsche Bank’s Saba proprietary trading desk now running a hedge fund, but he isn’t the best performer.

Fellow Saba alumnus Chad Liu didn’t appropriate the desk’s name for his own hedge fund, going with Prudence Investment Management, instead. And the prudence has paid off: The fund has returned some 200% to investors in its first two years and has boosted its assets from US$30 million to US$250 million, Bloomberg News reports.

Liu’s Hong Kong-based firm launched its Enhanced Income Fund in January 2009, returning an impressive 98% in its debut year. Last year, the fund rose 48%, and it is up 3% this year.

By contrast, Saba Capital Management, the hedge fund set up by Weinstein, former Asia co-head of the Deutsche Bank trading desk of the same name, returned 10.84% in 2010. Saba also debuted in 2009, in August, with US$560 million, and now manages well in excess of US$2 billion.

Saba recently launched a new fund, a “black swan” vehicle designed to profit from unlikely market events. Prudence, which boasts Detusche Bank veteran Wang Yuan and former Wing Lung Bank CEO Philip Wu as co-founders, did so as well, launching its RMB Income Fund in January. The new vehicle, which has already grown to US$50 million from an initial US$20 billion, invests in so-called “dim sum bonds,” Chinese yuan-denominated bonds sold in Hong Kong, and other yuan-denominated debt.

Liu credited the fund’s quick growth to its fast start—it’s already up 7%—and to growing interest in the space from institutional investors, especially Asian insurers.

“The turning point has arrived,” he told Bloomberg. “The market has certainly become big enough and liquid enough for institutions to get in.”


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