SWF-Turned-Hedge-Fund Manager

Terry Flanagan

Singaporean sovereign wealth fund manager continues government mandate at hedge fund.

With a total asset size of $7 trillion on the horizon for sovereign wealth funds (SWF), the wealth of nations continue to be a much sought-after investor pool alongside traditional institutions such as pensions, endowment and foundations. When sophisticated investors are present, market participants can be sure that hedge funds will be around to catch the action.

Today, for the more sophisticated SWF, hedge funds are becoming more part of the orthodox space—less extreme than they were, according to a buy-side source. Of course, name brand institutional investors prefer name brand hedge funds, so market participants can expect that top SWFs will be hunting down the top managers.

In the case of Singapore’s SWF, a preference for their own talent has come ashore. Aje Saigal, formerly a consultant for the Government of Singapore Investment Corporation (GIC), reportedly the world’s third largest SWF at $330 billion, will continue to invest for GIC, but now as chief investment officer of Nuvest Capital, an independent hedge fund set to launch in July 2012.

Saigal, who is ending a 30 year career at GIC, will be seeded by the SWF itself for his new venture. Saigal has been at GIC since inception in 1981, and has held several of positions at the firm: equities manager, chief investment officer for global equities, and ultimately, director of investment policy and strategy.

Currently, GIC has a mandate of $1 billion minimum investment, and is planning to increase their hedge fund allocations, a positive signal for Singapore, since the city-state is the second largest hub for alternative managers in Asia Pacific, just behind Hong Kong. Thirteen new Singaporean hedge funds launched in 2011, versus just 12 in Hong Kong, according to Eurekahedge. Furthermore, nearly 50 funds are managed out of Singapore, an exponential increase from just 10+ 18 months ago.

Other GIC alumni have left the government entity to pursue hedge fund opportunities, such as Singapore-based quantitative investment firm Octagon Capital. Octagon’s majority stakeholders include Nelson Chia and Lam Poh Min, both of whom previously worked for the GIC, according to Reuters. Nuvest will be a multi-asset class, emerging-markets focused hedge fund, with a targeted rate of return of 4-5% over inflation.

Nuvest will also be staffed by former talent from Barclays Global Investors, Vanguard, other U.S.-based hedge funds, as well as from the Australian defined contribution market.

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