The Banxia Macro Hedge Fund, a Shanghai-domiciled fund run by a former co-portfolio manager at the Honghu Fund in Hong Kong, has tracked a robust net return of at least 13% for the year after successfully shorting steel futures early in the year.
The strategy delivered a 2.6% gross return in November resulting in a 17.5% cumulative gross return in the first eleven months, or a net return of 13% for the year so far. The fund is relatively volatile and experienced a maximum drawdown of 9.5% in the first eleven months.
Li Bei, the founder and CIO of Banxia, launched the fund in January with her own money and those of several high net worth investors. Li said she remains the biggest investor in the fund that trades index and commodity futures and options including steel bars and options.
In February she took a large put position on steel bar futures and closed the position the following month that resulted in her best month so far.
Assets under management have since grown to about RMB 350m or about $60m. The fund Li said about 5 to 6 percentage points of the fund’s 17.5% gross return in the first eleven months of the year were derived from equity and the rest from commodities, mostly from the put options on March steel futures.
The fund gained 24% gross return in the first quarter and 1% in the second followed by a 6% drawdown in the third as turbulence hit global and equity and commodities sector due among others to the US-China trade war tension.
Li co-managed the Honghu Fund with Wentao Liang when it launched in 2013 but she left the Cayman-domiciled fund last year. The macro fund Honghu suffered a double-digit percentage loss this year.
Shanghai-based Banxia global macro fund enjoys double-digit gain on AsiaHedge.