Luck and gratitude a big part of the Dymon Asia success story

Dymon Asia founders Keith Tan (left) and Danny Yong started out as rivals on the ballgame court in university but became firm friends after taking the same class together in their second year.
Dymon Asia founders Keith Tan (left) and Danny Yong started out as rivals on the ballgame court in university but became firm friends after taking the same class together in their second year.PHOTO: AZIZ HUSSIN FOR THE STRAITS TIMES

They run an investment firm managing US$6 billion (S$8 billion) for major pension funds, asset managers and sovereign wealth funds, including Temasek Holdings, and their funds have been ranked among the best-performing hedge funds in the world.

But up close and personal, Mr Keith Tan and Mr Danny Yong, both 45, the founders of Dymon Asia, are still two university buddies who can barely believe their luck.

Anyone else would be happy to crow about how their own genius and hard work helped them build one of Singapore's most successful home-grown finance firms.

Mr Tan and Mr Yong keep bringing up the importance of luck and gratitude in their success story.

Take Mr Tan, whose parents were vegetable sellers and who grew up playing at the Geylang Serai wet market.

He recently participated in a survey on entrepreneurship. One of the questions asked him to rank, on a scale of one to 10, what kind of cards he was dealt at birth.

PLAYING TO DIFFERENT STRENGTHS

We focus on two extreme ends of investing – in our private equity business, Keith has an in-depth understanding of entrepreneurs and individual companies that we invest in, while I assess global events and
anticipate macroeconomic trends across the world to make top-down macro investments. ’’

MR DANNY YONG, referring to Mr Keith Tan. They are the founders of Dymon Asia.

"Considering my family's humble background, maybe most people's immediate reactions were to put down three or four, but mine was a definite 10," he says.

 "I might not have been given a very good financial head start, but since I was young, I saw how my parents worked. They didn't bring home a huge amount of money but they taught me how, with your bare pair of hands and the willingness to work hard, you can make a decent and honest living. No amount of money could have bought this kind of head start in life, and this has guided the way I have approached life since I was young."

Mr Yong grew up the youngest of three under the care of a single mother, a nurse, after his father died when he was 10.

"It forged my mindset. We were living off my mum's salary. We got by. I didn't feel poor, although I felt I was missing a father figure," he recalls. "But my mum always told me not to let anyone look down on me. Hence, I was always very competitive from a young age. Those early days drilled into my head that I needed to work hard so people wouldn't look down on me."

That competitive streak was what brought the two friends together at Nanyang Technological University.

Mr Yong says: "He played basketball and handball for his hall and I played badminton and handball for mine. So we started off as rivals, where he was the guy that, at times, contributed to beating my hall at basketball and handball.  So I didn't like him as I didn't like to lose.

"But in our second year, we ended up taking the same class and we got to know each other. My respect for Keith grew, so much so that before we graduated, I told him, 'If one day you start a business and you don't involve me, I'll punch you!'"

After graduation, the two pursued separate careers. Mr Yong was a trader at JP Morgan, Goldman Sachs and Citadel Investment Asia, while Mr Tan's resume includes heading the small and medium-sized enterprise lending team at Standard Chartered and then later being appointed the branch manager of its Shanghai office and a member of Standard Chartered's China executive committee.

In 2007, the good friends reunited. Mr Yong and some former colleagues at Citadel founded their own hedge fund called Abax Global Capital in Hong Kong, and Mr Yong immediately seized the opportunity to call upon his friend, Mr Tan.

In 2008, the two decided to go home to Singapore and start their own firm in Dymon Asia Capital and launch what would evolve into today's flagship product, the Dymon Asia Macro Fund, as well as establish a successful private equity business, Dymon Asia Private Equity.

"We focus on two extreme ends of investing - in our private equity business, Keith has an in-depth understanding of entrepreneurs and individual companies that we invest in, while I assess global events and anticipate macroeconomic trends across the world to make top-down macro investments," Mr Yong says. "We were very, very fortunate that Paul Tudor Jones, a legend in the hedge fund industry, agreed to give us US$100 million seed funding in August 2008."

The following month, investment bank Lehman Brothers collapsed, sparking off the financial crisis.

"Whilst we were unlucky that we launched just as the financial world was melting down, we were, at the same time, very fortunate that we managed to start our hedge fund.

"Frankly, had the US$100 million seed investment been delayed by even one month, it would have been cancelled, and hence, likely that Dymon Asia would not be in existence today. You must be passionate and good at what you do, and work extremely hard. But you also need some luck sometimes, in order to succeed," Mr Yong adds.

What is lucky, too, is that the two friends have managed to strengthen their friendship through the firm's highs and lows.

In January 2015, the fund was negatively impacted from exposure to the Swiss franc, when the Swiss central bank made the unexpected decision to depeg it from the euro. After the losses, Mr Yong and Mr Tan made a choice which they felt was the right thing to do.

They proactively rebated a portion of the fees they received from their strong performance in 2014 back to their investors for the loss in 2015. Investors applauded the decision and many commended the organisation for its alignment of interest with investors, which was uncommon in the industry.

"We didn't do it for the praise, we just felt it was the right thing to do," Mr Yong says.

Even employees applauded the decision. When the company carried out an anonymous survey to gauge staff satisfaction, one of the questions asked what made them proud to work for Dymon, and many cited this particular move as a factor.

Through the ups and downs, the firm has chalked up a series of impressive feats.

Last year, its Dymon Asia Macro Fund was the 35th best performing fund in the world, among funds that have over US$1 billion in assets and fifth within the macro strategy category. In 2011 and 2014, this same fund was within the top 10 performing large hedge funds in the world.

There are no similar global rankings for private equity, but the close to 40 per cent annual net returns that the business rakes in for clients is likely among the top 25 per cent in the world for performance.

The year before, that same fund was the 10 best performer in the world run by a large hedge fund.

Along the way, assets under management have ballooned from US$113 million at the firm's founding to approximately US$6 billion today. Besides the Dymon Asia Macro Fund and Dymon Asia Private Equity Fund, other funds within the firm include Dymon Asia Ventures and Dymon Asia Manager Solutions, which was seeded by Temasek Holdings in 2014.

The two friends' shared values carry over into their philanthropic work. Mr Tan sits on the main committee of the Yellow Ribbon Fund, part of the Yellow Ribbon Project that supports former offenders to reintegrate into society.

Mr Yong, meanwhile, set up a foundation to help children from challenging family backgrounds and The Ray of Hope Initiative, a non-profit organisation that uses crowdfunding to help donors get their money to those who need help, with an emphasis on accountability to donors.

The two are also working on a new TRY initiative, which aims to get organisations to hire more non-graduates, even school dropouts, as apprentices who can learn on the job and work their way up.

"Just three decades ago, it was common for non-graduates to work in finance. There were many stories of people who started in the mail room but worked their way up to become star traders and legendary investors," Mr Yong says.

"But now, it's so rare across all industries. Organisations find it easy to hire graduates with first-class honours from Ivy League universities. Why look through the haystack for hidden talent?"

Again, it all boils down to their belief that luck got them to where they are today, and wanting to help others achieve the same success.

Mr Yong notes: "Honestly, how much of what you know today you learnt on the job? Most people would say over 90 per cent of their skills were learnt on the job. So if you find a bunch of people who are curious, hungry to learn, driven, street smart or have decent EQ, if you give them an opportunity to learn by throwing them in the deep end, could some of them evolve into superstars too?

"We believe that when someone possesses certain personality traits and a strong desire to succeed, if given an opportunity to learn on the job, many can excel professionally, with or without a university degree. The requisite traits differ for different industries."

A version of this article appeared in the print edition of The Straits Times on May 02, 2017, with the headline 'Luck and gratitude a big part of the Dymon Asia success story'. Print Edition | Subscribe