Key Takeaways
- • Desmond How, former head of Nomura's proprietary credit trading desk, launched a long-short hedge fund focused on emerging-market dollar-denominated corporate bonds at GaoTeng Global Asset Management on January 28, 2019.
- • The new fund targets capacity of up to $3 billion, though How declined to disclose initial assets under management at launch.
- • GaoTeng Global Asset Management is a Hong Kong-based investment firm backed by Tencent and Hillhouse Capital Management, with How joining as head of fixed income in 2017.
- • How brings over 22 years of fixed-income investment experience and was ranked No. 1 by The Asset magazine for four consecutive years (2013-2016) as the most astute investor in Asian G3 bonds; his Nomura team was named top investment house for hedge funds in 2015 and 2016.
- • How positions the fund as a contrarian play, arguing that emerging credit markets already entered a bear market in 2018 following widespread defaults, and expects elevated volatility to create favorable conditions for long-short positioning in 2019.
Summary
Desmond How, a veteran credit trader from Nomura Holdings, has established a hedge fund specializing in emerging-market corporate bonds at GaoTeng Global Asset Management, a Tencent-backed investment firm based in Hong Kong. How, who previously headed a proprietary trading desk focused on credit products at Nomura, officially launched the long-short fund on January 28, 2019, after joining GaoTeng in 2017 as head of fixed income.
The fund will concentrate primarily on dollar-denominated emerging-market debt and carries a stated capacity target of $3 billion. While How did not disclose the amount of capital raised at launch, he outlined the fund's positioning in an interview, characterizing the emerging credit landscape as already bearing the hallmarks of a bear market following the wave of defaults that struck emerging credit markets during 2018. How brings substantial institutional credibility to the venture, with more than 22 years of fixed-income investment experience spanning roles at Lehman Brothers (beginning in early 2008) and subsequently at Nomura from 2008 to 2017, following Lehman's sale to the Japanese bank.
How's track record includes a four-year consecutive ranking as the most astute investor in Asian G3 bonds by The Asset magazine from 2013 to 2016. The proprietary trading team he led at Nomura, known as Global Capital Management, was recognized as the top investment house for hedge funds by the same publication in both 2015 and 2016. GaoTeng Global Asset Management itself represents a strategic partnership between Chinese technology conglomerate Tencent and Hillhouse Capital Management, positioning the firm within a network of significant institutional capital.
How's thesis for the new fund rests on the conviction that elevated market volatility in emerging credit markets will create tactical opportunities for a long-short strategy. He stated, "We are likely to witness more volatility this year, which is a great backdrop for our new fund," signaling his expectation that the 2019 environment will reward active, differentiated credit positioning despite—or perhaps because of—the challenging conditions evident in 2018.
The fund will concentrate primarily on dollar-denominated emerging-market debt and carries a stated capacity target of $3 billion. While How did not disclose the amount of capital raised at launch, he outlined the fund's positioning in an interview, characterizing the emerging credit landscape as already bearing the hallmarks of a bear market following the wave of defaults that struck emerging credit markets during 2018. How brings substantial institutional credibility to the venture, with more than 22 years of fixed-income investment experience spanning roles at Lehman Brothers (beginning in early 2008) and subsequently at Nomura from 2008 to 2017, following Lehman's sale to the Japanese bank.
How's track record includes a four-year consecutive ranking as the most astute investor in Asian G3 bonds by The Asset magazine from 2013 to 2016. The proprietary trading team he led at Nomura, known as Global Capital Management, was recognized as the top investment house for hedge funds by the same publication in both 2015 and 2016. GaoTeng Global Asset Management itself represents a strategic partnership between Chinese technology conglomerate Tencent and Hillhouse Capital Management, positioning the firm within a network of significant institutional capital.
How's thesis for the new fund rests on the conviction that elevated market volatility in emerging credit markets will create tactical opportunities for a long-short strategy. He stated, "We are likely to witness more volatility this year, which is a great backdrop for our new fund," signaling his expectation that the 2019 environment will reward active, differentiated credit positioning despite—or perhaps because of—the challenging conditions evident in 2018.
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