New Silk Road hedge fund shuts down after weak returns, US investors pullback and founders’ decision to ‘hang up their boots’

SINGAPORE: New Silk Road Investment Pte is shutting down after years of weak returns and as US investors’ enthusiasm for liquid equity investments in Asia waned, cutting the fund’s assets from nearly S$2 billion in 2021 to S$615 million by the end of 2024.

However, Bloomberg reported that the firm wasn’t forced to wind down because of deficits but because both founders, now in their 60s, opted for a slower pace, with no immediate successors ready to take over the business.

The firm, one of Singapore’s early hedge funds and among the first foreign investors in China’s onshore markets, was founded in 2009 by Yik Luen Hoong, a former Deutsche Bank executive, and Raymond Goh, who previously led Asian equities at GIC.

While Mr Hoong noted that the firm’s traditional source of funding from US institutions had been “less enthusiastic” about liquid equity investments in Asia in recent years, “in no small part due to geopolitical reasons,” he added: “We had just decided to hang up our boots to return the capital to our investors so that they can pursue a more appropriate strategy of the time. It’s as simple as two veterans choosing a different path in life.”

Mr Hoong confirmed the firm’s closure in an email to Bloomberg, stating that all capital will be returned to investors.

The fund’s performance struggled in recent years. Its Asia Landmark Fund and China Fund recorded losses in three of the last five years. In 2022, Asia Landmark Fund dropped by 28% while China Fund fell 19%, alongside the 22% decline in China’s CSI 300 Index.

“We are just one of many active value funds in Asia that have not been the favour of the time,” he said, adding that the market had shifted in a way that no longer supports a “longer-term fundamental investing approach with value bias”.

New Silk Road had already started scaling back earlier this year, cutting staff in Shanghai and closing a more recently launched Southeast Asia fund, although the number of roles affected remains unclear.

Mr Hoong, who acknowledged that active management in Asia has been “tough,” also noted that Singapore remains a successful hub for hedge funds. /TISG

Read also: Will Cathay Cineplexes soon bid its final farewell amid millions in debt?