TenCap’s quest to build a ‘better funds management business’
Jun Bei Liu and Jason Todd’s new hedge fund business, TenCap, will launch with $1.5 billion of FUM and a drive to do more with it than just perform.
Todd and Liu want to shoot the lights out, of course. But they also want to “build a better funds management business” by differentiating TenCap on more than just the metrics that define most of the players in the Australian market.
“There’s not that personality coming through in terms of what (funds management businesses) deliver for clients, and we wanted to marry those two things up,” Todd told media on Wednesday. “When we looked at the way other managers operate, and the distribution models that they employ, it doesn’t feel like they’ve grown as technology has grown. Jun Bei has the best retail brand in the market, and she’s approachable; client wants more of Jun Bei’s time, but she doesn’t have more time – so we want to explore how we can amplify her to our client base.”
Though performance shouldn’t be a problem. TenCap’s flagship fund is the same storied long-short Alpha Plus Fund Liu ran at Tribeca and has retained the backing of big clients like UniSuper. Todd, who was CIO at Commonwealth Private before striking out alongside Liu, said that the new business would target the traditional market segments of institutional and wholesale but would also explore how to attract what he called the “next generation of investors” as what have been traditionally institutional strategies become more available to them.
“I wouldn’t call it skepticism, but maybe there’s not a lot of broad knowledge of how a hedge fund fits into the portfolio, and part of our job going forward will be to educate on how these investments work,” Todd said. “If everybody’s worried about volatility in the market, then what’s better than a long-short fund? But I think a lot of people don’t think of it in that way.”
While Alpha Plus is firmly focussed on Australian equities, Liu kept a close eye on the DeepSeek shock that wiped nearly a trillion dollars from the valuation of Nvidia. While some are still trying to figure out what the ramifications are, Liu is certain that it presents a lot of opportunities.
“There’s two things: when there’s advances in technology, they create more demand. It gets cheaper, and more people want to use it. We’ve seen it with every single technology – it’s just a matter of time. Just look at how we use iPhones and the internet and how telcos can put up their prices because we consume so much data. It creates more demand, and the infrastructure that’s required for it will continue to be highly sought after.”
“DeepSeek is a Chinese company, with Chinese infrastructure. And because of that it’s harder for international businesses or businesses in the US and other developed markets to adopt because of the security risks. It’s hard to see that adopted by the West very quickly.”
For the general macro and markets, the future looks bright; Todd believes that the story in 12 months’ time will be one of higher growth and lower rates and inflation.
“I think most strategists and macro commentators just like to hedge their bets; they’ll say they’re cautiously optimistic,” Todd said. “I don’t even know what that means. You’re either cautious or you’re optimistic but you’re not both. If I gave you these conditions for markets in 12 months’ time – better growth, lower inflation and lower rates – would you be more or less bullish? I think you’d be bullish.
“And I don’t believe valuations are a constraint to markets going higher. They might be a constraint to super stocks, but there are certain sectors in the market that offer a lot of valuation upside and are trading below the averages.”