By a fortunate stroke of serendipity, two young lads met at a personal development course in 2009. Little did they expect that both would run an investment strategy together for a very long time. Pursuing global equities with asymmetrical risk reward characteristics, Heritage Global Capital Fund is an offshoot of what Tay Jun Hao and Xavier See had been doing for their own family office. “We had been running the strategy for slightly over four years. When the opportunity arose as markets were in turmoil, we decided to set it up to accept outside money in 2016,” say the eloquent chaps in unison.
We are here to make money, not for excitement. We are living in one of the most prosperous times in the history of mankind. There isn’t a better time to be born alive. Knowing this gives us a sense of perspective.
1. Swiss-Asia: What does Heritage Global Capital Fund mean to you?
Heritage Global: As Guy Spier said, investing involves dealing with elements of chance, probabilistic thinking and asymmetrical information. Luck is not something within our control. However, if we are able to handle the latter two, then we will do well for shareholders in the long run, which is something we aspire to.
What we love about investing is that long term results matter. For that to happen, we need a good framework that depends on the robustness of our thinking and reasoning. The long term success of our fund is a way for us to validate this framework.
2. SA: Besides running this fund, you also have a multi-family office. Tell us more.
HG: In this multi-family office, we are involved in the manufacturing, medical and banking industries. Previously, investment decisions were made informally, so our results were a hit or miss. Since then, we’ve placed a much greater emphasis on due diligence and formalised the entire investment process.
More importantly, regular discussions with our board of advisors have introduced us to new perspectives. This helps us focus more on generating the best possible returns while carefully considering the associated downside risks involved in each investment.
3. SA: Are you risk-averse or risk-taking?
HG: Extremely risk averse. Capital is scarce and we hate losing money. Even outside the fund, the first question we ask ourselves in any kind of investment is, how much money can we lose? If we don’t have a satisfactory answer, our default answer is always no. This philosophy can be boring, but we are happy sticking to our circle of competence. We are here to make money, not for excitement.
One thing we’ve learnt is that sticking to your core competencies is critical to business success. Each of us only has a finite amount of time each day. The art of delegation is essential.
4. SA: How do you overcome and manage your emotions?
HG: Studying history helps immensely. We are living in one of the most prosperous times in the history of mankind. There isn’t a better time to be born alive. Knowing this gives us a sense of perspective. As entrepreneurs, we understand very well how business works. Investment ideas take time to mature and having a long term time horizon keeps our emotions in check.
5. SA: Is that why you chose Swiss-Asia to be the fund’s investment manager?
HG: One thing we’ve learnt is that sticking to your core competencies is critical to business success. Each of us only has a finite amount of time everyday. The art of delegation is essential. Swiss-Asia was able to provide a platform to handle other processes while we focused on two things that make any fund a success – fund performance and asset raising.
6. SA: How do you feel about the markets in the next six months?
HG: We agree when JP Morgan says the stock market will fluctuate.
7. SA: Are you set for a spectacular performance in 2017?
HG: We are holding our breath.
Image: Joseph Yates