Newly-formed Stallia Capital Management plans to launch its maiden hedge fund, a market-neutral offering, in July. The San Francisco-based firm is currently in talks with institutional and individual investors in Asia about backing the fund.
Stallia will invest in exchanged-listed futures and exchange-traded funds on global equity indices, including those focused on precious metals and energy, U.S. government fixed-income securities and major currencies.
“This is like a multi-strategy fund with a multi-alpha generating strategy,” said founder Raphael Kan, formerly of CIBC Wealth Management. “Each strategy is trying to exploit a certain type of market inefficiency, but because of our academic background, we’ve created a brand new way of constructing a portfolio using the fundamentals of modern finance theory.”
Kan hopes to drum up support for his the offering, Stallia Total Alpha Fund, in Asia, specifically Singapore, Hong Kong and Taiwan, before hitting the U.S. circuit. He said a lot of corporation and family offices are changing their mandates to funds of funds, which are viewed as safer bets versus single-manager funds.
“It is not enough for funds to do value investing with positions less than 5% of their portfolio because that 5% could be in trouble, given today’s environment. But unfortunately, funds of funds and family offices still seem to be adopting that kind of conventional approach,” he said.
“We only get exposure from broad indices so we don’t get systematic risk from individual stocks. We’re actually trying to do something that is very safe.”
Kan plans to hire a chief risk officer, and is currently working with a $1 billion-plus U.S.-based hedge fund manager as he gets closer to launching the vehicle.
The fund will charge a 2% management fee and a 20% incentive fee and have a $1 million minimum investment requirement.