April 13, 2011 / 9:14 AM / in 8 years

Target Asset founder ends retirement, to set up $500 mln fund

SINGAPORE, April 13 (Reuters) - Target Asset Management, one of Singapore’s most successful boutique fund managers, is launching a new $500 million Asia ex-Japan equity fund after founder Teng Ngiek Lian decided to stay in business and not retire as planned.

Teng, whose Target Asia Fund delivered an almost 10-fold return during its 14-year existence, said in July last year that the firm will wind down its operations as he wanted to retire. [ID:nSGE66S0H1]

The firm has since returned all the money in that fund and Teng is now looking to raise a maximum of $500 million for his new Target Value Fund which will invest in Asian companies that are out of favour with investors.

About 10 percent of the money will come from Teng and his managers.

“We have just begun to launch the fund. The first close will be at the end of May and we should be able to start investing in June,” Teng told Reuters in an interview.

Unlike his previous fund which sought to beat the MSCI Asia ex-Japan Index , Teng said the new fund will aim for absolute returns over a three-year period. Investors who withdraw their money within three years will have to pay a penalty that will be reinvested in the fund.

“There is no deliberate attempt to play dirty or set a new watermark,” he added, pointing to the new high reached by the Target Asia Fund just before it was wound up.

Teng managed about $2 billion in assets when he announced his retirement last year.

In the aftermath of the financial crisis when many funds lost heavily, several fund managers shut down their existing funds and set up new ones so that it would be easier to earn performance fees.

According to Target’s report to investors, the Target Asia Fund returned investors 892 percent net of fees over its 14 years of existence, handily beating the 81 percent rise in the MSCI Asia ex-Japan index while keeping volatility low.

The fund lost 45 percent of its value in 2008 but rebounded 68 percent the following year.

ADDICTIVE BUT STRESSFUL

Explaining his decision to continue working, Teng, 61, said he decided to continue managing money after taking a short break because he found investing “addictive”.

By running a smaller fund and taking a longer-term view on investing, he could spend time at the foundation he set up after his retirement, he added.

Pointing to the increasing number of hedge funds and high-frequency traders that have made markets more volatile, Teng said fund management has become very intense and stressful.

“If you want to outperform the index, you have to run faster (but) value guys like us need a longer time to kick tyres and do our modelling.”

“The other way to make money is to take a longer-term view. It will be less hectic because we can take a longer view instead of worry about every piece of news,” he said. (Reporting by Kevin Lim)

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