Former GIC exec's low-key Singapore fund amasses $13.4 billion for global foray

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Former GIC exec's low-key Singapore fund amasses $13.4 billion for global foray | The Straits Times

PUBLISHED FEB 18, 2022, 7:18 AM SGT

SINGAPORE (BLOOMBERG) - Each morning, Mr Ng Kok Song meditates for 25 minutes to clear his mind. Later he may tend to his garden or even take a nap. But far from enjoying a quiet retirement, the 74-year-old has built one of Singapore's fastest-growing investment firms with plans to make it a global player.

Avanda Investment Management's assets have more than doubled to around US$10 billion (S$13.4 billion) since it was co-founded by Mr Ng in mid-2015 - soon after he retired from sovereign wealth giant GIC as its chief investment officer following a 42-year career in the public service.

With Singapore's stature as a global finance hub and gateway to Asia rising - and Hong Kong's attractiveness potentially waning - Avanda is seeking to grow by investing in a wider variety of assets across the region, including China, and bringing on new clients from family offices to pension funds and other institutions.

"My vision was Avanda should help Singapore and Asian investors invest globally and help global investors invest in Asia," Mr Ng said in his first interview about the firm, where he is the executive chairman.

Mr Ng, who was GIC's group chief investment officer from 2007 to 2013, said a love of investing and belief that you get better at it with age were among his main reasons for starting Avanda; finance oracles Warren Buffett and Charlie Munger are his inspirations.

Another was a long career where managing public funds helped transform Singapore from a sleepy outpost to a gleaming city-state. It is a journey close to his heart; Mr Ng was one of 11 siblings who grew up financially poor living in a mud-floored hut before earning scholarships and a public service career.

Support from state-linked firms has, in turn, been a key pillar for Avanda. Mr Ng said his three founding clients were the Singapore Labour Foundation, Temasek and GIC, whose contributions helped launch the firm with around US$4 billion in assets. Since then about half the gains have been from market returns while the rest was from new clients and additional capital as the firm established a track record.

Avanda now has five funds and about 20 clients around the world from university endowments and government agencies to wealthy individuals from Asia and the United States.

Long focus
The firm has earned a 7.5 per cent annualised rate of return before fees from its inception to December 2021. That is higher than the 5.9 per cent average return on the Eurekahedge Multi-Strategy Hedge Fund Index between 2016 and 2021. Avanda is also bigger than any Singapore-based hedge fund; the largest one manages US$7.66 billion, according to With Intelligence data.

Mr Ng sees Avanda as an asset manager and not a hedge fund, partly because it is a long-only investor. Management fees average at around 0.5 per cent with a performance fee above pre-agreed target returns. Its first fund, Avanda Global Multi-Asset Fund, backs a range of global public equities, bonds and currencies while others focus on Asian stocks, global fixed income and even private deals.

Previous deals included pre-IPO fund-raising rounds, such as Indonesia's GoTo Group in November. It has also acted as a cornerstone investor, including for a listing by Philippine foodmaker Monde Nissin. Now it wants to back private companies with no immediate intention to publicly list, either by investing in them directly or via other funds.

"It will now be necessary going forward to consider moving into alternative investments such as private equity, real estate, real resources, the greening economy and various areas of technologies," Mr Ng said, citing the difficulty of getting returns that beat inflation from public markets. "You have to move into less liquid forms of investments that can deliver better rates of return."

China bull
Ramping up investments in Asia - especially China - has been a long-term theme for Mr Ng, who also sits on the global advisory board of Pacific Investment Management. He has previously advised investors to have half of their exposure to China or Asia and said Avanda spent 2021 putting its money where its mouth is.

"We moved almost 20 per cent of our exposure in global fixed income to Chinese government bonds," he said. "That was unusual but our experience over the last 12 months has borne out our expectations that bond yields in China are likely to be coming down."

A third of its global equities exposure was also put into Asia, with most of that going to China, followed by regional markets including South Korea and Vietnam. And Avanda is hedging against its expectations of higher inflation by buying commodities including gold and inflation-linked bonds.

But overall, Mr Ng expects the global economy to "get along fine" as both China and the US have demonstrated resilience during the pandemic. Even the Chinese property sector may have hit its bottom, he added.

Within China, Mr Ng's four favoured areas of interest are agriculture, health services, green economy businesses and companies in the supply chains for products such as automobiles that can help bolster the government's "dual circulation" development model.

"But you've got to be careful because in essential areas of services, China will not allow profiteering - we saw this in the education and now in the property sector," he said, adding the era of super growth in those fields was now over.

As the day comes to an end, Mr Ng once again meditates. But that does not mean he is slowing down from what could be the most lucrative years of his life - far from a crowded childhood sleeping beneath an attap roof.

"I like to say that all of us are guessing," he said of investors. "But some of us are guessing with the benefit of experience and an understanding of what is going on, and others guess blindly."