FengHe Asia (USTE) Fund Ltd A

Fund Snapshot

ISIN	KYG3365C1096
Share Class	A
Investor Category	Institutional
Inception Date	Dec 30, 2016
Fund AUM	2.48B
Fund AUM Date	Jun 30, 2022
Drawdown Risk	Very High

 

Subscriptions

 

Frequency	Monthly
Cutoff Date	26 Mar 2026 6:00 PM SGT
Minimum Initial	USD 50,000.00
Minimum Subsequent	USD 50,000.00

 

Fund Overview

FengHe Asia Fund is a long-short equity fund targeting capital appreciation through investments in public equities linked to Asia's economic changes. It employs a fundamental stock selection strategy within a diversified portfolio exhibiting low correlation. The investment process utilizes a proprietary research framework (5M3T3D) and a software system, "LOGOS," for due diligence against around 100 criteria. Managed by FengHe Fund Management, established in 2009, it is regulated by the Monetary Authority of Singapore and based in the Cayman Islands.  

Fund Strategy

The fund employs a long-short equity strategy focused on Asian markets, emphasizing deep research and institutional knowledge to uncover long-term value, described as "Farming, instead of Hunting." Key elements of the strategy include:

• Strategy Type: long-short equity vehicle aimed at absolute returns via stock selection, independent of market direction.
• Core Asset Classes: primarily public equities linked to Asia's economic growth across sectors like technology, industrials, healthcare, and consumer markets.
• Research Framework: proprietary "5M3T3D" analysis covering Market Size, Market Share, Operating Margins, Business Model, Management Team (5M); segmenting outlooks (3T); assessing growth, expectation delta, and valuation (3D).
• Idea Generation: 16 sector specialists monitor ~400-450 companies, leading to 150-180 ideas, vetted before portfolio inclusion.

Portfolio Construction

The portfolio is designed to be resilient and diversified, managing concentration and correlation risk. It holds 50 to 120 positions, averaging 1% to 2% each, ensuring no single position dominates performance. Gross exposure is maintained below 140%, reported at 86% as of September 2025. Sector allocation includes Information Technology (33.08% gross), Industrials (23.89% gross), and Consumer Discretionary (8.26% gross), based on bottom-up research. Regional exposure covers core Asian markets and the US, with major net exposures to China (25.89%) and the US (12.97%). The fund remains flexible, allocating capital where risk-reward opportunities are most compelling.

Fees

Expense Ratio	Not Applicable
Fund Management Fee	2.00%
Fund Performance Fee	20.00%
High Water Mark	Yes

Risk Management

The fund employs a systematic and disciplined risk management framework that is embedded in all stages of the investment process. The approach is built on three core principles: bottom-up discipline, leverage discipline, and stop-loss discipline.  

• LOGOS software conducts systematic pre-trade screening for stock ideas, scoring against ~100 tailored criteria.
• Only ideas meeting a set scoring threshold are considered for portfolio inclusion, enhancing objectivity.
• Individual position limits: capped at 6% of AUM at cost and 8% mark-to-market; exceptions may be granted by CIO.
• Concentrations across geographical and industry sectors are regularly monitored.
• Gross exposure typically managed up to 140%; net exposure is dynamically adjusted based on fundamental ideas.
• Disciplined stop-loss procedures in place; long positions with 20% losses cut by one-third, short positions by half.
• Initial monthly or intra-monthly drawdown exceeding 2.5% triggers a 20% gross exposure reduction.
• 98% of portfolio positions are liquidatable within five days, ensuring liquidity for trades and stop-loss actions.

  This disciplined process has been instrumental in managing market volatility. The fund has successfully navigated multiple periods of market turmoil with drawdowns significantly lower than the broader market, demonstrating the resilience of its risk framework.  

Risks of Investing

Market & Liquidity Risk

Fund invests in public equities in Asia, exposed to market fluctuations, volatility, and liquidity constraints. Value may decline due to economic or political events; liquidating positions can be challenging under certain conditions.  

Leverage Risk

Fund uses leverage, amplifying both gains and losses. Adherence to internal limits exists, but borrowed capital can lead to substantial losses from small adverse price movements.  

Asia Focus & Geopolitical Risk

Concentration in Asia brings risks like regulatory changes, political instability, and economic slowdowns, particularly in China. Geopolitical tensions may negatively impact investment performance.  

Key-Person Risk

Fund's success relies heavily on key personnel, notably CIO Matt Hu. Loss of his services could materially affect the fund's ability to meet investment objectives.  

Short Selling Risk

Engaging in short selling involves unlimited loss potential; a short squeeze may force high-priced buybacks leading to significant losses. A stop-loss process is in place to mitigate this risk.

Why FengHe Asia (USTE) Fund Ltd A ?

• 13.12% net annualized since inception
• Outperformance in 58 out of the 61 down market months for MSCI AXJ
• Low market correlation: 0.46 to MSCI AXJ and 0.46 to MSCI Asia