DragonBack Capital, a Hong Kong-based multistrategy hedge fund that launched in March, is building up its assets and portfolio. The three partners that are heading up the fund have more than 50 years combined experience in the Asia Pacific markets, which CEO Robert Lance says gives his fund a distinct local advantage.
"We're predominantly focused on an equity-based and derivatives strategy with three core strategies: equity long/short, relative value and volatility trading," relates Lance, a former cohead of Lehman Brothers' Hong Kong equities division. The fund launched with about $7 million in capital, he says, adding that he's looking at a soft close of $250 million in the first year and a total fund strategy of about $500 million.
On the front end, DragonBack has implemented TradingScreen for EMS/OMS functionality, including compliance. Lance says that the solution enables the fund to route directly to sales trading desks or models, although the fund doesn't use algorithms and views strategy as its edge in investment decisions.
DragonBack also selected Imagine Software's Imagine Trading System — specifically the ASP-service version, Derivatives.com — for portfolio and risk management. "The ASP version gives us a lot of flexibility and the cost of entry is lower," explains Lance. "It also gives us the option to transition to bringing the system in-house as we grow or bring in more users."
With the TradingScreen and Imagine solutions in place, the fund can pre-allocate trading down to the substrategy level and maintain the portfolio on a real-time basis, Lance relates. "Anything that's listed that we're trading is straight-through processed into Imagine down to the substrategy level," he says, noting that OTC trades are manually booked into Imagine.
It was important that the portfolio management and risk management solutions include booking engine and cash-management engine capabilities for use across the functional areas of the fund, Lance adds. "Most hedge funds have split responsibilities or a segregated process, with the portfolio management side and risk management side separate," he says. "But we can use this for all sides — the traders, the investment team, operations and risk."