Utilizing deep research, risk awareness, and strong networks to find investment opportunities across Asia.
Marlon Sanchez, Founder and CEO, Skyway Pacific
Marlon Sanchez founded Hong Kong-based research and advisory firm Skyway Pacific in 2022 to link international investors with emerging hedge funds in Asia-Pacific (APAC), taking a distinctive ‘funds of funds-style’ approach.
Shaun Beaney, Editor of Preqin First Close, asked him about the fast-changing landscape for alternative assets, new opportunities in China, Japan, and India, and connecting the Americas with APAC.
We’re a bridge between hedge fund investors and hedge fund managers. The Sunshine Skyway Bridge is in my hometown of Tampa Bay, Florida. What’s notable about ‘skyway’ as a brand is that the bridge was hit by a freight ship in 1980 during a thunderstorm. We rebuilt that bridge over a few years. Today it's a big icon in our community. Whether it's as a consultant, as an advisor, or as a friend to the community, we’re always reminded of the downside. In all things, we look to provide a well-informed explanation of the risks involved and, obviously, avenues to mitigate them. It’s risk awareness and it’s resilience.
Our platform has hedge fund research at the core. We profile hedge funds. With those that wind up being core in the way of real opportunity or timing, we’ll go much deeper in due diligence and discovery. We use our experience – 20 years for myself and another 20-plus years for my partner, Chris Nash – to inform investors. We've been involved in more than 100 hedge fund launches prior to launching Skyway Pacific. With Joseph Kwong and Doris Wen, the four of us are Skyway.
We've got a strong network of hedge fund managers as well as service providers and peers in consulting and advisory work. That network’s the backbone in terms of being able to make informed decisions. Generally speaking, we’re advising institutional investors in hedge funds. I think there’s a great space for us in Asia, particularly in Hong Kong, where you have family offices that are graduating to be much more institutional.
It’s the abundance of dispersion as well as volatility. These aspects of capital markets allow for a more trading-oriented approach to extracting alpha. We find it most often in the multi-strategy approach. It’s one of the things that Asia does best. And it's one of those spaces where I think we've probably seen the largest, most successful hedge funds over the last 20 years.
Because we have so many different jurisdictions at work and so many different agendas at play in the way of policy reforms, both fiscal and monetary. You have 13 countries to speak of, and eight very real – and now, quite liquid – currencies in APAC. You have three of the world’s largest economies: China, Japan, and India. Not only do we have that volatility and dispersion to take advantage of, but we’ll have the liquidity to affect these strategies in more pronounced fashion.
We started looking at funds of funds as a way to invest in hedge funds, primarily because of the inherent diversification – call it a ‘fund-of-fund scenario’. As we started the firm and began advising investors, we started thinking about all kinds of ways for us to marry strategies such that you put investors in line with double-digit outcomes over a sustainable amount of time. Uncorrelated, impressive gains over time is the goal. We prefer emerging managers as a broader base. As they grow, there’s usually a period of outsized gains.
When it comes to outflows due to currency moves, Japan is the one market where you've had the most pronounced weakness in currency. At the same time, it's probably the one market where we've done the most work and probably seen most interest on the part of investors. You see vehicles that are very well run by talented fund managers spinning out on their own. You see more money going into Japan strategies. Probably the best example is Oasis Management, which has got to be one of the biggest successes.
The bigger question is, if you're a large US allocator and you’re concerned about currency weakness, do you think to yourself, ‘Okay, great opportunity for me to rotate and find other ideas in Asia’? Or do you say ‘You know what, great – I'm done with that, I'm moving back to the US’? I think the relative proportions are 50/50.
China is obviously paramount in Asia. It's been interesting to watch in the last three years, such that it has clearly been a one-way trade: exiting that market. But Asia doesn’t benefit from a weak China, long term. The need for China to right itself resonates even with China policymakers, onshore. There will be a long-term plan to get China back in motion, and back in the eyes of the would-be or incremental investor globally.
You have to look at [China] as three avenues: venture capital (VC) was where [private capital] was concentrated for the vast majority of the last 20 years. We saw great evidence of success in that, right? But markets moved lower and we had more uncertainty. And we had COVID-19 issues that hampered this. If we look at the family offices in this time zone, most of them are born out of some VC event. Then they move into something similar, whether it's a private equity fund, fund of funds, or investing directly. That leads to more liquid alternatives, which would be hedge funds, down the road. That's the maturation of the investor community in Asia, particularly China.
It's definitely on the horizon.
Shaun Beaney is the Editor of Preqin First Close, the essential newsletter for the global alternatives market. It’s quick, easy, and free to subscribe here.
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The opinions and facts included in the above do not constitute investment advice. Professional advice should be sought before making any investment or other decisions. Preqin and Skyway Pacific accept no liability for any decisions taken in relation to the above.