The rise and fall of New Silk Road, one of the longest-running hedge funds in Singapore

[SINGAPORE] Investment management firm New Silk Road announced earlier in July that it will be closing its doors after a 16-year run in Asia.

Based in Singapore, it is one of the longest-running hedge funds in the city-state. It is the investment manager of the Asia Landmark Fund, which has onshore and offshore investment structures for US and international investors through a Cayman LP and Cayman offshore feeder fund.

So what caused New Silk Road to shutter, and who are its founders? The Business Times explains, and also takes a look at what hedge funds are, and this industry in Singapore.

The origins of New Silk Road, and who are its founders?

Founded in 2009, the company was started by Raymond Goh, the former head of Asian equities at GIC, and Hoong Yik Luen, the former head of Hong Kong-China equity products at Deutsche Bank.

New Silk Road in its early stages was considered a pioneer in the finance scene of Singapore. For context, the Republic’s hedge fund market managed S$59 billion pre-2010s, which has since grown to S$327 billion as at December 2024, based on data from the Monetary Authority of Singapore (MAS).

Goh and Hoong’s hedge fund is known to be one of the earliest in Singapore to invest long-short equities across Asia. Its strength was being among the early foreign investors in China, via an on‑the‑ground Shanghai team.

Notably, the company received Qualified Foreign Institutional Investor access in 2012 to invest in Chinese yuan-denominated mainland Chinese stocks and bonds. At the time, fewer than 200 firms received such licences from the China Securities Regulatory Commission.

This move attracted a large pool of US institutional investors seeking Asia-centric exposure for their portfolios, drawn to New Silk Road’s Asia Landmark Fund and China Fund,

New Silk Road’s growth trajectory saw an incline since its beginnings, having reached nearly US$2 billion in assets under management in 2021.

Goh and Hoong are among the first pioneers in setting up an Asia focused hedge fund. Goh was previously with GIC for 18 years, according to his LinkedIn profile.

Hoong graduated from the National University of Singapore (NUS) with an electrical engineering degree in 1990. Following that, he was in a few roles involving public and private market equity research and investment with various global firms, according to the NUS website. After his last role as the head of Hong Kong-China equity products at Deutsche Bank in 2008, he co-founded New Silk Road Investment with Goh.

Both are crossing 60 years old, Hoong told Bloomberg.

China investment slump

Hoong told Bloomberg that the main reason for the shuttering of the fund is that they are opting for a slower pace.

However, the fund’s struggles also came during a time when China markets went into a slump, with China’s widespread regulatory crackdown across sectors such as technology and real estate, and investors flocking to US markets.

In 2022, China’s benchmark CSI 300 Index tumbled by 22 per cent, with the decline extending into 2023. This affected various China investors and caused many funds to close. The China bear market persisted for a couple of years, but has since rebounded this year.

Both the Asia Landmark Fund and the China Fund recorded negative returns for three of the past five years, with slumps of 28 per cent and 19 per cent, respectively, in 2022, according to Bloomberg, citing sources.

These effects were clearly felt by New Silk Road, where it scaled back on staff levels in Shanghai, and closed a recently launched South-east Asia fund, said Hoong. The number of staff affected remained undisclosed.

The closure of Hoong and Goh’s hedge fund was announced on Jul 22, where all remaining capital will be returned to investors and the vehicles will be shuttered, amid a high level of investor redemptions and weak returns.

Experts BT spoke to suggested that once a certain level of investor redemptions is hit, it is difficult for hedge funds to build back their capital.

New Silk Road is not the only one to have gone through a rocky decline in Asia in the recent few years, though for a mix of other reasons.

Another Singapore hedge fund Asia Genesis, for example, in January 2024 faced a significant level of drawdowns, in the light of its long positions in Hong Kong and China collapsing due to China’s market rout, and short bets on the Nikkei crushed as Japan stocks surged to a 34-year high that month.

The Asia Genesis Macro fund saw drawdowns of 18.8 per cent within the first weeks of January 2024 following its long-short play went wrong. The fund closed all its positions by Jan 18, 2024, and returned money after its losses to investors.

What is a hedge fund, and what are some top hedge funds in Singapore?

Within Asia-Pacific, Singapore continues to be an attractive centre for alternative and hedge fund managers to set up their regional investment teams, said MAS last year.

The regulator noted that more global hedge fund managers are setting up offices here, with more than 250 of such managers as at the end of 2023.

Some top hedge fund managers in Singapore include Quantedge Capital and Dymon Asia Capital. Dymon Asia manages over US$3.5 billion, while Quantedge manages more than US$4 billion. Dymon says its fund posted an 8 per cent return through May this year, topping other funds at global peers. Last year, it was up 17 per cent.

Another long-running Singapore hedge fund manager is APS Capital Management, with its founder Wong Kok Hoi also considered an early pioneer in the scene. He was previously with GIC and MAS.

Hedge funds are private funds actively managed by portfolio managers, and typically are considered higher-risk and requires a higher investment to start.

There are many types of hedge funds, with various strategies ranging from long-short, global macro and multi-strategy. They can invest in a variety of assets, including stocks, fixed income, real estate, currencies and futures.

The Singapore hedge fund market totalled S$327 billion as at December, according to data from MAS.