Perseverance Asset Management: long bias and fundamental bottom-up strategy
Perseverance’s success story has been recognized by Asia Asset Management (AAM) in its Best of the Best 2022 award for best domestic private fund manager (China). The company’s chief investment officer, Deng Xiaofeng, was awarded the title of CIO of the Year for China.
According to Daisy Liang, head of global business development at Perseverance, global asset owners have increasingly engaged in hedge fund assets invested in China over the past five years, mainly due to strong market fundamentals.
“Foreign investors firmly believe that there is a group of high-quality Chinese enterprises with innovative and hardworking entrepreneurs,” Liang said in an interview with AAM.
Additionally, the China Securities Regulatory Commission has taken steps to ease restrictions on margin trading and short selling on more stocks in recent years as part of its efforts to boost the national capital market. .
In addition, the easing of regulations has reassured foreign investors despite the fact that the Chinese capital market has gone through “turbulent” years, facing problems such as stock market volatility, interstate trade disputes, United and China and the coronavirus pandemic.
Long Bias Strategies
Despite the easing of regulations on short selling, Liang observes that foreign institutional investors are generally more geared towards investing in Chinese equities, seeking to capture both market beta and alpha.
Perseverance primarily offers long-biased and long-only equity hedge fund solutions with a bottom-up approach focused on fundamental research. Liang says the company’s solutions align with its core allocation to global asset owners’ global equity portfolios, in some cases alternative portfolios.
Asset owners typically consider a variety of factors, including sustainability of investment performance, ability to generate alpha, investment philosophy, alignment of portfolio manager incentives, and structure and process of the research team when selecting hedge fund managers who invest in China.
Investment managers must tick the boxes both in terms of investment due diligence and operational due diligence to be selected by large global institutional investors, Liang said.
Perseverance’s global business has grown rapidly, with some leading international institutional investors such as pension funds and sovereign wealth funds becoming its clients, boosted by investor preference for fundamental and long-term equity strategies. term, as well as very selective criteria and a rigorous due diligence process on managers. ‘ investment and operating capacities.
“Long-only strategies are among the most common choices for foreign investors,” Liang said. “They prefer to go for fundamental strategic investment styles because the approaches are similar to how they invest in global markets.”
Importantly, the company’s funds are overseen by a mix of portfolio managers with different investment styles, including deep value, contrarian and growth-oriented. Liang notes that this multi-manager model caters to different demands from different clients.
In terms of strategic preference, in general, sovereign wealth funds and pension funds favor long-only strategies, while family offices and endowments generally prefer long-biased investment choices.
Regarding investment trends, Liang says some institutional clients have rebalanced their allocation to complementary investments in China since the market sell-off in July 2021.
The market adjustment prompted them to rebuild their position as the value of their China allocation fell below the target level. Overall, investors are committed to the long term and rarely adjust their core portfolio allocation, she says.
(Source: Asia Asset Management)
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