• Boutique firm on the cusp of entering billion-dollar club

    Source: https://citywireasia.com/news/boutique-firm-on-the-cusp-of-entering-billion-dollar-club/a1310783

    Schroders' former CIO for Asia ex-Japan equities started his own boutique firm 15 years ago, and is now close to managing almost $1bn in assets


    Leong Wah Kheong, CEO of boutique fund house AR Capital, has seen his firm grow to manage close to $1bn in assets in 15 years.

    Impressively, the bulk of the funds come from family offices, as well as private monies in Southeast Asia, according to Leong, who declined to mention names at this stage.

    Leong said some of these seed investors even helped to introduce other families to the Singapore-based firm when it was just starting out.

    The former CIO for Asia ex-Japan equities at Schroders founded the boutique firm in 2005 and started off with the AR New Asia fund with $32m.

    The Singapore firm currently manages three funds, with over $860m in total assets under management.

    The AR New Asia fund has grown to $570.8m, returning 27.5% in US dollar terms over the 2019 calendar year. The stellar performance has even piqued institutional investors’ interest, a spokesperson confirmed.

    Leong's motivation in leaving his cushy job to start his own firm reverberates around the way he operates his firm, even today.

    ‘There comes a point of time where one wants to be able to focus more on what he is doing,’ he said, adding while initial challenges of putting together a team and raising capital were daunting, the time was right for him to leave.

    For the CEO, the biggest draw of being in a boutique firm was the satisfaction from an owner and principal manager point of view. The ability to control resources, as well as building relationships with clients was also a boon.

    His attitude seems to have translated to his work. One noticeable trend in the fund is the longevity of its clients' investments, with some having invested for up to 14 years.

    2020 and beyond

    While the general consensus points to a muted 2020 after the strong performance of 2019, opportunities are still abound in the region, Leong observed.

    Specifically, healthcare in the area of biologics, the internet, and technology, he said.

    China’s Alibaba remain the fund’s largest holding so far, with Taiwan Semiconductor and Samsung Electronics following close behind.

    Millicent Lai, Leong’s co-portfolio manager elaborates on the strategy that has worked for the firm so far, which is to leverage on its AR Focus Fund’s experience in the US market to proxy outcomes for Asia’s development.

    The AR Focus Fund, which invests in the US as well as Asia, returned 28.5% in US dollar terms annualised over 2019.

    ‘Some trends are more established in the US, such as biotech. When we look into Asia, we can use our experiences in the US market to think about how the landscape here can develop,’ Lai said.

    Meanwhile, Leong spots another trend within the family offices invested in his funds.

    ‘Increasingly, most of these family offices are looking for more income-generating and dividend-yielding products,’ he said.

    To that end, the firm launched its global thematic fund in 2017, as well as a dividend plus fund in 2019.