William Lee, a former JPMorgan Chase equity derivatives manager, announced he’d begin his own hedge fund before year-end.
The goal, says Lee, is to “exploit mispricing in the region’s derivative markets and broad economic trends”.
While a definitive date hasn’t been announced, Lee says he anticipates a late October, early November timeframe for beginning trading. It will earn profits from those securities with prices that deviated from fundamental values. These securities were affected by regulatory restrictions, along with varying trading habits between industries or companies versus individual investors.
Lee said his goal is to try to capture investor demand for hedge funds whose returns are not directly tied to the direction of stock and bond markets.
A lot of retail investors who buy structured products only care about whether the markets go up or go down,
ignoring other factors such as volatility and dividends that affect option pricing, said Lee. “It creates a value for us to get in.”
New Fund’s Objective
The new fund will seek – and anticipates between 12 percent to 18 percent annual return. It will achieve this by focusing specifically on Asia-Pacific markets, which include China, Japan, Australia, Korea, India, Singapore and Malaysia.
Further, the focus will be on fixed income securities and associated derivatives, trade equity and foreign exchange. This, according to Lee, will be accomplished by using American instruments to hedge associated risk. Lee estimates about 30 percent of the fund’s investments will bet on broader regional economic trends.
Explaining the local markets are most often policy driven, Lee explains bigger trends and extended time frames, exclusive to these markets, will work to his advantage. While he declined to release specifics associated with fundraising methods or efforts, he did say these types funds that employ these specific strategies “may manage at least $2 billion of assets”.
JPMorgan Connection
Lee earned bachelor’s and master’s degrees in computer science from the Massachusetts Institute of Technology and also has a law degree.
About Lee
For nearly two decades, Lee has worked in the banking industry. First, he worked for Merrill Lynch for five years, then for Goldman Sachs. At Merrill Lynch, he worked as a senior consultant for mortgage back securities and at Goldman Sachs, his title was senior database administration. Since then, he’s worked exclusively for JPMorgan Chase. He came aboard as a foreign exchange option trader in Singapore in 1995.
By 2000, he’d returned to Hong Kong with the goal of setting up JPMorgan’s equity derivatives team in Asia, but outside Japan. He began his efforts with just four people. By the times he was finished three years later, there more than 130 employees in the department.
In the meantime, Lee is speaking with former JPMorgan colleagues to gauge their interest in joining the new hedge fund. He says there are five people he is especially courting. He declined naming those employees due to the confidential nature of the talks at this stage of the game.
Lee is talking to several people, including former JPMorgan colleagues, about joining his company and will start it with at least five people, he said, declining to identify them because of the discussions are still continuing.
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