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People Need Rules

Even hot-shot hedge-fund managers. Just ask Danny Yong.
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You'd think a Singaporean would appreciate the importance of rules. By Jacklee from Singapore. [CC BY-SA 2.5 ], from Wikimedia Commons

You'd think a Singaporean would appreciate the importance of rules. By Jacklee from Singapore. [CC BY-SA 2.5 ], from Wikimedia Commons

Dymon Asia Capital has had a pretty charmed life as hedge funds go. Seeded by Paul Tudor Jones, quickly growing into a multi-billion-dollar business, generally enviable returns, a booming private-equity side business. Its flagship Asia Macro Fund has been among the top 10 performing hedge funds in the world twice in its decade of existence. Like most hedge funds, Asia Macro has rules governing what founder Danny Yong can do with, for instance, position limits or stop-loss orders. This was apparently too constraining, for in 2011 Yong launched his Asia Currency Value Fund, although he might as well have called it the “Do Whatever The Hell I Want Fund,” insofar as it is not limited to Asia, currencies or value bets.

For a while, this worked out really well. The unconstrained Yong put up a 56% return in 2016. Since then? Not so much.

The fund managed by Danny Yong’s Singapore-based Dymon Asia Capital Ltd. had lost around 40% of its value in the year through August, following similar declines over the course of 2017, according to two people familiar with its performance. It has also seen redemptions which have reduced its assets under management to around $100 million….

The fund had positions on equities in addition to currencies, wagering that U.S. stocks would decline, the people said. It also had bets that the South Korean won would weaken and that gold prices would rise this year, according to one of the people.

By contrast, the rules-based flagship is up 1% this year, no great shakes, but also not down by almost half two years in a row.

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