TSQ Capital Multi-Strategy Fund

Everything You Need to Know About Twelve Squared Capital’s Multi-Strategy Fund

Diversification has always been the holy grail of investment. The main reason for this is that diversification allows for effective management of risk exposure. And, this is exactly what Twelve Squared (TSQ) Capital’s Multi-Strategy Fund aimed to achieve when it was first launched in 2007.

The Fund aims to generate high risk-adjusted returns, primarily from the derivatives market. It does this through a mix of investment strategies and assets, including currencies, equity and debt instruments. It offers a competitive advantage over funds with a traditional mix of assets and strategies, both in terms of risk management and returns.

Key Facts About the Fund

Given its unique multi-strategy approach, it comes as no surprise that the fund has consistently outperformed both the global public equity and debt markets, as well as the hedge funds peer group. Of the 139 months that the fund has been operational, as of September 2019, it has provided positive returns for 137 months. You get a glimpse of how return-oriented the fund is by the fact that it continued to give stable and strong returns even during the 2008-2009 financial crisis.

Here are some key facts about this fund investors should know:

  • Assets under management (AUM), as of September 2019, stood at US$407 million.
  • Assets classes the fund invests in include, but not limited to, currencies, equities, index-linked certificates, commodities options and index futures.
  • Diversification through investments in assets that have low correlations to each other and to traditional asset classes.
  • The fund also offers structured finance for qualified projects covered by strong collaterals and guarantees.
  • The average annualised return since its inception has been 10.08%, as of January 2019.
  • Its consistent positive performance has won it top ratings from Preqin, including being ranked as the #2 most consistent top performing CTA for 3 consecutive years, from 2015 to 2018. The fund has also been ranked #1 among the most consistent top performing CTAs for 5 consecutive years, from 2013 to 2018.

Unique Investment Strategy

The fund uses a unique mix of three strategies to ensure stable returns, using a proprietary market analytical and signalling system, SOFX. This system uses quantitative and statistical analysis to evaluate risk and generate buy/sell signals from the derivatives market.

It uses the Dynamic Option Strategy (DOS) to take advantage of the stability and efficiency of the global forex market, which usually sees lower monthly volatility than the other financial markets, especially equities.

Along with this, the fund makes use of Systematic Trend Following (STF) to identify short- to medium-term trends that offer trading opportunities across a wide range of spot currency and currency options.

The fund also uses various other investment strategies, such as Public & Private Special Situations Strategies, which focus on:

  • Marketable securities-backed financing to provide loans to companies listed on the Hong Kong Main Board or GEM. The borrowing company’s stock is used as collateral.
  • Property-backed financing, which offers loans backed by first and second mortgage of luxury and normal homes and commercial real estate.
  • Corporate or commercial loans for companies that need financing for large capex or operations.
  • Consumer loans for individuals, for their personal or family needs.

The fund also makes use of Systematic Trading strategies, such as:

  • Spot arbitrage, to connect to various price feeds of brokers and banks, in order to take advantage of price differences.
  • Triangular arbitrage, simultaneously entering three-way trading positions, trading three currencies in different markets, where the cross-rates differ.
  • Trend following, to enter short-term positions in the direction of the trend and long-term positions to protect against any downside risk.
  • Dynamic option, which identifies consolidated markets to sell calls and puts, as well as place spot stop orders to protect against downside risks.

Why Invest in the Fund?

Apart from its excellent track record of stable, double-digit annualised returns, there are various other advantages that this fund offers, such as:

  • High returns by identifying systematic trading opportunities.
  • Use of robust arbitrage strategies, based on sophisticated arbitrage calculation models, execution and order management systems.
  • The backing of cutting-edge technology that allows microsecond latencies and instantaneous execution, with almost zero downtime.
  • Regulatory compliance across multiple markets.

The Fund has been consistently outperforming for more than a decade now. Learn more about this investment opportunity today by contacting info@tsqcapital.com.