Hong Kong's first currency-compliant hedge fund targets the rich

Author: Luo Fei, Tencent News

Hong Kong, which has been noisy for several months due to the currency circle, has finally calmed down. When Tencent News "Periscope" met Ye Yizhou in his office in the central area of Hong Kong in late June, he expressed that he prefers Hong Kong as it is now. The previous one felt unreal and noisy to him.

Ye Yizhou has been involved in cryptocurrency trading for more than 6 years and is the head of Frontier Rational Asset Management Co., Ltd. The fund is currently the only compliant currency hedge fund in Hong Kong, and it is also the best-performing virtual currency trading license in Hong Kong. According to public information, there are already 11 funds that can invest in virtual currency in Hong Kong.

According to Tencent news "Periscope", Ye Yizhou's fund is the only company outperforming the market among the 11 funds. According to public information, Ye Yizhou's team won the third place in the list of net income in the field of cryptocurrency funds selected by Barclays in 2022, that is, a net income rate of 9.2% - the industry is generally close to 50% loss.

At the end of 2022, Ye Yizhou's fund will distribute about HK$70 million in dividends to the fund LP (limited partner).

Ye Yizhou told Tencent News "Periscope" that he received more than 50 people who came to Hong Kong to "seek opportunities in the currency circle" during the busiest week in Hong Kong's currency circle in April this year. These people came from the United States, the United Kingdom, mainland China and Singapore. , Dubai and other places, hoping that Hong Kong can become a harbor for them to stay as "digital nomads".

These people believe that 2022 is the most difficult year in the currency circle. Ye Yizhou and his team can make money under the supervision of Hong Kong. Perhaps Hong Kong is worth a try. In 2022, Lunar, the leading stablecoin in the currency industry, will be thundered in May, and FTX, the top three exchanges in the industry, will be thundered in November, and then Bitcoin will plummet, falling from nearly US$40,000 in early May of that year to US$16,000.

**But Ye Yizhou believes that Hong Kong is not suitable for all people in the currency circle, and it is not even suitable for some people who want to enter the currency circle from traditional finance, but it is more suitable for smart traditional financial people. **

Unlike most traders in the currency circle who were "born from grass roots", Ye Yizhou is a "regular army" trader who came out of Wall Street. He graduated from the Business School of Columbia University in the United States. After graduation, he joined Fore Research & Management, a well-known hedge fund company on Wall Street at that time, and worked in the trading of convertible bond arbitrage for many years.

In 2014, Ye Yizhou chose to return to Hong Kong and joined a local stock hedge fund company. During this period, he started investing in Bitcoin very early because of his personal interest. He told Tencent News "Periscope" that at that time there was no clear supervision of bitcoin transactions in the market, and he and his friends started to get involved in large-scale bitcoin secondary market transactions in 2017. Later, he resigned from the organization to start a business, and set up Rational Capital Co., Ltd. in Hong Kong.

Ye Yizhou said that most of the trading strategies for asset targets in traditional financial markets are based on fundamentals, quantification, and event-driven, and these strategies can be directly translated to currency trading. Relatively speaking, trading in the currency circle is easier, because most of the participants in the currency circle are more "novice", that is, they do not have professional financial and trading skills. When masters with traditional financial backgrounds enter the currency circle, they will trade with these novices in the market. **Except for A-shares on exchanges in the global traditional financial market, the ratio of professional investors to retail investors is about 8:2.

Ye Yizhou called it the "cognitive price difference" in the currency circle. In the 24-hour tradable currency world, when traders around the world are trading the same target at the same time, their behavior and trading logic are very different from each other. It also gives professional traders a lot of opportunities to make money that are less common in traditional finance.

Unlike most old people in the currency circle, Ye Yizhou was the first batch of people in Hong Kong to apply for a cryptocurrency fund license, and he will get the license in early 2022. At the beginning of 2023, his company became the first investment institution to allow multi-strategy investment in cryptocurrency transactions in Hong Kong, the so-called hedge fund.

Ye Yizhou told Tencent News "Periscope" that in addition to reviewing the ability of fund managers, the supervision will also carefully investigate the risk issues in multi-strategy, how to better protect the interests of investors, and the good transaction records of the fund itself and behavior etc.

Tencent News "Periscope" learned that more funds in the Hong Kong market are not choosing a compliant route, and they are not in a hurry to apply for a license from the regulator, because these people are doing transactions with their own money or friends' money , and will not raise funds from outside for the time being, which is equivalent to individual investors.

Among the funds approved in Hong Kong, only Frontier has a transaction record for a complete fiscal year from the beginning of 2022 to the present.

Ye Yizhou told Tencent News "Periscope" that as a traditional financial person, he and his team have firmly chosen the route of "being supervised" since the first day of its establishment.

This is because Ye Yizhou hopes that in the future, his fund can target more institutional investors. Tencent News "Periscope" learned that besides Ye Yizhou himself, there are also some high-net-worth clients, such as Li Lin, the founder of the currency exchange Huobi Group, and so on.

Ye Yizhou and his team have also contacted some old money families in Hong Kong one after another, and even contacted some leading private banks, hoping to find suitable product channels for them. Ye Yizhou told Tencent News "Periscope" that the current fundraising pressure is not great, and it is more inclined to launch fund products from institutions or family offices to attract wealthy groups.

This may have something to do with Ye Yizhou's background in traditional finance. In addition to his preference for supervision, he prefers to deal with institutions. In his words, this is a "batch" product that can cover enough wealthy groups in need.

According to Tencent News "Periscope", these leading private banks do cover almost the vast majority of wealthy resources in Hong Kong and Mainland China, but they have very strict requirements on the fund products on the shelves, such as fund compliance, transaction records and reliability. Trading strategies, etc., among which transaction records generally take 3 years. As far as the current situation in Hong Kong is concerned, the longest transaction record is only one and a half years. Ye Yizhou's fund is no exception.

Ye Yizhou and his colleagues need to wait patiently for a year and a half if they want to enter the product shelf of the leading private bank according to the strict process. However, according to Tencent news "Periscope", some Chinese-funded financial institutions are also actively promoting the progress of listing cryptocurrency funds.

A rich man in Hong Kong once told Tencent News "Periscope" that they are indeed interested in this kind of regulated cryptocurrency fund products, and they also hope that they can conduct asset allocation through institutions. In the past few years, during the savage growth of the cryptocurrency market, these rich people have more or less participated in some currency circle investments, and all of these investments have lost money without exception.