Return on Investment

A successful alumnus returns to give some good advice to aspiring money managers

May 02, 2018

Not too many years ago, Hugo Chan was running to his business classes in Bridge Hall and the Accounting building, working to keep up on his homework assignments and team projects.

These days he can afford to take a more leisurely pace. On campus at least.

Chan ’11 is the founder and principal of Kingsferry Capital, a young and growing value investment management company with more than $230 million in assets under management and unlimited upside potential. He was the guest speaker at the April 24Undergraduate Student Investment Fund’s annual presentation and dinner at the University Club.

He is the youngest keynote speaker in the club’s 10-year history, said Suh-Pyng Ku, vice dean for graduate programs, professor of clinical finance and business economics and academic co-director of the Center for Investment Studies, which manages the student fund.

“Investing is hard, mostly because you need patience and discipline,” he said. “Don’t try to time the market: focus on the time you spend in the market.”  Hugo Chan '11, Founder and Principal, Kingsferry Capital

The Undergraduate Student Investment Fund (USIF) is a selective and year-long class that gives students interested in asset management hands-on experience using money from two funds with approximately $3.6 million in holdings.

“Investing Is Hard”

Although Chan and his wife, Wei-Ting Huang ’10, met while students at USC Marshall, Chan says he didn’t realize there was a student investment club for undergraduates at the time.

“I wish I’d known about this fund when I was at USC,” he said. “It would definitely have been relevant to my interests.”

After graduation, Chan joined Bank of America Merrill Lynch as an investment banker before joining the Carlyle Group on the buy side. He and his wife decided to launch their own fund, with just $3 million, in 2016. Based in Shanghai, their flagship fund, run out of Kingsferry Capital, saw an 88 percent return in its first 12 months, making it No. 1 in the Asia Pacific region and No. 5 worldwide among all equity strategies hedge funds.

Chan and Huang’s remarkable accomplishment owes a debt to what they call “thinking contrarian.”

“If you’re doing what everyone else does, you’re going to get the same result,” Chan said. “If you don’t want to be just average, you need to diverge—to be different. This is a challenge because humans are social beings who naturally orient toward others, so being contrarian, whether in investing or in life, takes patience, conviction and hard work.”

Chan, who was recently featured in Forbes’ 30 Under 30 list in the Venture Capital and Finance arenas, offered the young money managers a few tips, including avoiding the urge to try to time the market. 

“Investing is hard, mostly because you need patience and discipline,” he said. “Don’t try to time the market: focus on the time you spend in the market.”

Student Returns

After his keynote speech, the 16 student money managers gave board members, faculty and friends an overview of their own returns for the year. The good news: the consolidated weighted average benchmark return was 9.94 percent.

But then they had to answer some pointed questions about their stock selection process from professional money managers in the audience as well as from Lawrence Harris, Fred V. Keenan Chair in Finance and Business Economics and former chief economist of the SEC. Harris is a preeminent scholar on the topic of trading, and his book, Trading and Exchanges: Market Microstructure for Practitioners, is widely regarded as the seminal text for entrants into the field.

“We don’t go easy on them because they need to know how investors think and what kind of answers they will be expected to have,” he said. “It’s tough, but it’s the best way to learn.”

USIF and its graduate counterpart, SIF, are sponsored by USC Marshall’s Center for Investment Studies (CIS). Founded in 2002, CIS serves as a forum for students to acquire experiential learning, faculty to conduct impactful research and industry experts to share valuable insights.